These changes may soon be altering the entire face of the auto coverage industry.
A report has just been released that has indicated that approximately 75 percent of companies in the property casualty industry believe that usage based insurance (UBI) will create a significant shift in the auto coverage from the current situation through 2020.
The report said that 70 percent of insurers are already involved in some level of UBI.
The report was created by Strategy Meets Action (SMA), which is an insurance advisory firm. It stated that among all property and casualty insurers, 70 percent are already engaged in a usage based insurance program in some way, and 20 percent already have programs running in the United States and Canada. Among the leading 10 insurers in the United States, eight already have a pilot or full UBI program.
The industry has been tinkering with the technology involved in usage based insurance for a decade and a half.
According to one of the study’s co-authors, Mark Breading, “Insurers have been experimenting with telematics for 15 years. Now, telematics is rapidly gaining momentum, and every auto insurer should be thinking about their plans for telematics and usage based insurance.”
Towers Watson, another advisory firm, has also released a paper that discusses the topic. In it, it stated that the technology and its associated application is changing the insurance industry as a whole. It pointed out that a number of major insurers have progressed well beyond their pilot stage for usage based insurance.
The National Association of Insurance Commissioners (NAIC) has said that the application of usage based insurance programs actually isn’t anything new. In fact, the first ones appeared about a decade ago, when Progressive and General Motors Assurance Company began offering discounts to drivers when they had lower mileage as recorded by technology that combined cellular systems and GPS devices.
Since that time, a large number of additional usage based insurance programs have made their way into the marketplace, including State Farm’s Drive Safe and Save, as well as Allstate’s DriveWise. Participating insurers are ever increasing the number of states in which they are offering the form of auto coverage.