In big news for the auto insurance industry, at a recent Berkshire Hathaway shareholder meeting, the financial mastermind Buffett confirmed his support of usage-based insurance (UBI).
UBI, a method of insurance pricing that measures how the individual drives, is being hailed by many as the future of auto insurance. Elaborating on his stance, Buffett stated that through measuring how people drive, UBI is making a valuable contribution to the insurance industry. When calculating an insurance premium, the aim is to evaluate the propensity of loss. Knowing how the individual drives instead of relying on proxies such as a credit scores gives greater predictive power to underwriting models, enhancing the sophistication of pricing across the board.
David Pratt, general manager, usage-based insurance, Progressive, concurs. “The data we get from UBI are our best predictor of losses,” he says. “They are a better predictor than driving record, age, marital status, credit score or any of the other things companies are now using.”
Progressive, the insurance carrier with the lion’s share of this emerging market, has 1.6 million customers on their UBI program. This segment of the insurance industry currently represents a relatively insignificant 1.1% of the insurance market. However, many insurance carriers are following in Progressive’s profitable shoes, including Allstate, State Farm, Zurich, State Farm, Liberty Mutual amongst others. With the tipping point for UBI calculated to arrive in the next year to eighteen months, this insurance trend, and now given the official seal of approval by one of the world’s foremost financial leaders Warrant Buffett, seems set to grow exponentially over the coming years.
To help capitalize on this profitable insurance development, Insurance Telematics USA 2014 (3-4 September at the Radisson Aqua Blu, Chicago, IL) is back to provide all the insight needed to understand, implement and finesse a UBI program. Key topics include investment in the telematics industry, UBI big data and next-gen UBI cognitive pricing models. These sessions will be led by UBI’s foremost thought leaders, including Progressive, US Dept. of Transport, The Hartford, American Family Insurance, Ford, LexisNexis, IBM and Towers Watson.
American Family Insurance said: “UBI and Telematics has moved from a niche concept to a strategic necessity in our industry. In some shape or form, it is here to stay. [Insurance Telematics USA] is a great combination of expertise, information, and experience to help navigate through it all.”
The Insurance Telematics USA Conference & Exhibition(3-4 September at the Radisson Aqua Blu, Chicago) unities the insurance, software and automotive industries to examine the steps needed to implement a UBI program with a strong business model and take it to the mass-market: the tipping point is just around the corner.
For the complete Insurance Telematics USA 2014 agenda and speaker line-up, visit: www.telematicsupdate.com/insurance-telematics/
Progressive stated that Insurance Telematics USA is a “Great opportunity to see all the major players in the telematics insurance space at one time”.
For the complete Insurance Telematics USA 2014 conference program and speaker line-up, access the e-brochure at: http://www.telematicsupdate.com/insurance-telematics/conference-event-brochure.phpor contact the Telematics Update team at email@example.com
Register by July 11 via the secure link below to take advantage of a $200 saving on all conference passes: secure.telematicsupdate.com/insurance-telematics/register.php
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