A new usage-based insurance (UBI) software platform will allow companies to track drivers' behavior through smartphone sensors and geolocation services.
Agero, one of the nation's largest suppliers of roadside safety software and services to automakers and insurance companies, said its new UBI telematics suite will transmit to insurers the information needed to offer discounts to good drivers, penalize others, and send alerts to emergency assistance service providers.
The UBI suite consists of the PolicyPal app, which tracks driving habits in real time, and Auto Crash Notification (ACN), which automatically notifies emergency services within moments of an accident.
Currently, State Farm's In-Drive and Progressive's Snapshot program, offer customers the opportunity to voluntarily participate in programs in which their insurer collects vehicle data and uses the information to determine driving habits, which in turn can be used to offer lower-rate incentives to safer operators or penalize bad drives with higher rates.
Unlike Agero's new platform, however, In-Drive and Snapshot, use a small data collection device that plugs into a vehicle's standard OBDII onboard diagnostics port under the dashboard and transmits data from a car's central computer to insurance companies.
Agero's new mobile suite, which is certified for use with Sprint's Velocity mobile-to-mobile "connected vehicle" service and Verizon Wireless customers, will greatly expand upon the universe of consumers who can vie for "discount rates" based on their driving profiles. The mobile device also travels with them in or out of the vehicle.
'15 minutes or less'— the price wars
Over the past decade, the insurance industry has been embroiled in a heated price war, with companies vying to be king of the heap for discount pricing.
"It's becoming a cutthroat market. They're competing on price," said Jeff Blecher, senior vice president of strategy at Medford, Mass.-based Agero. "To break that mold, they need a new business model. UBI does that. Now, they can compete based on the risk profile of drivers."
UBI offers the insurance industry new opportunities for tailored discount programs. Notably, they can switch from relying OBDII dongles plugged into the customer's car and instead use mobile apps that travel with the driver, whether he's traveling in his own car or another vehicle.
"We want to align our strategy... with the smartphone as primary data collection point," Blecher said.
Emergency and roadside assistance services, such as GM's OnStar, today use vehicle sensors and telematics systems to detect accidents and mechanical problems and then alert emergency first responders or roadside assistance providers. Blecher said smartphones are a better option.
"The problem we had was [that] although connected vehicle services are more prevalent than ever before, still only 5% of vehicles today are actually connected," he said.
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