state of the ubi market · 4 current market penetration insurance group 2014 nwp (000's) 1....
TRANSCRIPT
September 24, 2015
Gary Wang, FCAS, MAAA
Michael Chen, FCAS, MAAA
State of the UBI MarketShifting UBI Strategies and Market Sentiment
1
About the presenters
Gary Wang, FCAS, MAAA
Consulting ActuaryBloomington, Illinois Office
Michael Chen, FCAS, MAAA
Consulting ActuaryDes Moines, Iowa Office
2
Survey of the current market environment
3
What percent of the market has a UBI based personal auto insurance policy?
1%
5%
10%
15%
20%
A
B
C
D
Polling question #1
E
4
Current market penetration
Insurance Group 2014 NWP (000's)
1. State Farm Group 35,372,515
2. Berkshire Hathaway Insurance Group 20,552,102
3. Allstate Insurance Group 18,836,252
4. Progressive Insurance Group 16,374,660
5. USAA Group 9,824,529
6. Liberty Mutual Insurance Companies 8,445,483
7. Nationwide Group 7,258,632
8. Farmers Insurance Group 7,249,243
9. American Family Insurance Group 3,516,209
10. Travelers Group 3,389,868
11. Hartford Insurance Group 2,623,599
12. Erie Insurance Group 2,357,010
13. Auto Club Enterprises Insurance Group 2,348,951
14. MetLife Auto & Home Group 2,238,005
15. Mercury General Group 2,219,159
16. CSAA Insurance Group 2,142,687
Progressive
Snapshot®:
2.6 Billion
5
• Progressive Snapshot®
– 2.6 billion premium written
– 12 billion miles of recorded miles
– 2.5 million participants
• Progressive® Insurance has formally chosen Censio to develop the software for the insurance company's leading usage-based insurance program, Snapshot. The company will begin a pilot of the mobile app with select customers across the country in mid-September.
-Sep 2, 2015
Keeping an eye on the leader
6
Consumer reporting information
Installed device
Smartphone
Satellite monitoring
What would be your ideal UBI solution?
Polling question #2
A
B
C
D
7
• Mobile App solutions
– Allstate
– Progressive
• OEM systems
– Ford SYNC®
• State Farm
– OnStar
• National General Insurance
• State Farm
• Progressive
• VERISK!
Moving beyond the OBD-II port devices
8
• Verisk Telematics Data Exchange
– Verisk Insurance Solutions Announces GM as Inaugural Auto Manufacturer to Join Telematics Data Exchange.
-Sep 2, 2015
– Expected Rollout: Summer 2016
On the horizon – data exchanges and clearinghouses?
9
Considerations for a successful UBI pilot program
10
Considerations for a successful UBI pilot program
Sometimes starting a UBI program feels like:
Step 1:
Get UBI data
Step 2:
???
Step 3:
Profit!
11
We would argue that understanding the second step of what you will do with the data collected is an instrumental step to consider when setting up your UBI Pilot program.
Things to consider:
• What is the motivation for implementing UBI?
For use in rating plans
For use outside of rating (claims adjusting or underwriting)
As a value add for insureds with youthful drivers
Everybody else is doing it
Considerations for a successful UBI pilot program
12
Things to consider for rating• What data will you initially use in rating? Are those data elements
collected by your device?
Mileage
Excessive Acceleration
Hard Braking
Speeding
Cornering
Time of day
Location
• Do you plan on updating the rating once you collect more of your own data?
Will additional data elements be used?
Are those additional elements currently collected?
Considerations for a successful UBI pilot program
13
Setting up a Pilot
• Devices
Multiple devices (mobile vs OBD-II)
• Participants
Team analyzing results
Cross section of demographics
• Measures a wider range of responses
• Goals of the Pilot
The goal is not to design a score since you will not get enough data
Understanding how a product will look
Considerations for a successful UBI pilot program
14
Evaluating a UBI Pilot Program• Accuracy
How will accuracy of data be determined?• Survey
Pre-Pilot• Preconceived ideas
How good of a driver do they think they are?
Post-Pilot• Describing the Experience
• Multiple devices in a vehicle
Considerations for a successful UBI pilot program
15
Evaluating a UBI Pilot Program• Cost
Context of the cost • (mature vs youthful)• Area (city vs rural)• Market size
• Ease of Use Device and App and the interactive
experience Ways to cater to passive or active audience
Considerations for a successful UBI pilot program
16
When Evaluating
• How is data stored?
• How is the data accessed
– Short term like snapshot or continuous
• Hacking
– Near Field Communication
• Interference with vehicle operations
• How does the application determine a trip?
– User activated
– Activated in the background during the course of a trip
• Smart Phone battery usage
Considerations for a successful UBI pilot program
17
What if the device makes a mistake?
Will it drain my phone battery?
Will they know everywhere I go?
Will one incident make my rates skyrocket?
Can this app/device be hacked?
What is the top consumer concern when signing up for a UBI based personal auto insurance policy?
Polling question #3
A
B
C
D
E
18
Top 3 frequently asked participant questions.
3) How accurate is the data?
Considerations for a successful UBI pilot program
19
Top 3 frequently asked participant questions.
2) How much will this drain my Smart Phone battery?.• Most application use 5-10% of the battery in a day dependent on
amount of driving
Considerations for a successful UBI pilot program
20
Frequently asked participant questions.
1) Be prepared to address privacy concerns.
• Particularly related to location data
When many pilot participants are company employees some may be concerned that the location and date/time date may be used in other ways than evaluating a device for UBI.
– Example:
» Letting the wellness department know that an employee ate at a fast-food restaurant for both breakfast and lunch 20 of the last 30 days.
• Some of these concerns can be addressed by anonymizing data using ID numbers instead of names.
Considerations for a successful UBI pilot program
21
Seeing UBI from the consumer’s point of view
22
• How can data on the UBI experience of consumers shape product development, pricing and customer service offerings?
• How important are UBI device options to the consumer?
• What are the expectations of the consumer regarding savings?
• What other services are important to consumers in a UBI program?
In the UBI of the consumer
23
• Analysis – sentiment of social media posts related to UBI programs
– Text mining
– Review of individual tweets
• Data
– Over 6.5 million insurance tweets total (January, 2012 to present)
– Keyword searches for terms related to UBI programs in US, UK and Canada
– UBI information collected since October 2012
Description of analysis - social media data
• Data fields
Content of the tweet
Specific tweet recipient
Sender of the tweet
Language of tweet
Where the tweet originated
Link to a picture of user
Latitude and longitude of the user
Date and time of tweet
User profile
24
23.4%
18.2%
14.1%
13.4%
18.9%
24.4%
9.8%
12.2%
8.8%
15.8%
12.3%
16.7%
0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0%
Privacy
Misunderstanding of Program
Rate Can Go Up
Concerned About Results
2013 Study 2014 Study 2015 Study
Non-customer negative responses - US
Pretty sure if I tried Snapshot, Progressive
would triple my premium.
Progressive Snapshot
'bombshell': Device can raise users'
rates
25
33.3%
30.7%
6.7%
10.7%
9.3%
47.0%
30.0%
10.0%
3.0%
1.0%
0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0% 40.0% 45.0% 50.0%
Can't Get A Quote
Uncompetitive Premium
Customer Service
Rejected by Portal
Misunderstanding of Program
Non-Customer Negative Responses - UK
2014 2015
Non-customer negative responses - UK
Conclusions1. Crossover effect2. Consumer education is key3. Entire experience has to be
positive
26
76%
14%
6%
4%
76%
14%
0%
2%
74%
7%
0%
13%
0% 10% 20% 30% 40% 50% 60% 70% 80%
Savings
Excitement
Tracking
Better Driving
2013 Study 2014 Study 2015 Study
Positive customer responses - US
27
23%
16%15%
14%
10%
4%
24%
18%
20%
11%
1% 1%
16%
8%
22%
10%
2%
0%
0%
5%
10%
15%
20%
25%
30%
Driving Habits Beeping Snapshot Evaluation Annoying Premium Change Installation
2013 Study 2014 Study 2015 Study
Customer complaints - US
28
Customer complaints - UK
32.0%
13.1%
7.6%
14.8%
7.6%
6.1%
34%
18%
15%
6%
10%
0%
0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0% 40.0%
Poor Customer Service
General Discontentment
Disagreement with Results
Problem with Portal
Didn’t save enough money
Installation
Complaints
29
Savings - US
2%
59%
85%
96% 94%
2%
6%
0%
1%0%
96%
35%
15%
3%6%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Zero Less than 10% 10% to 19% 20% to 29% 30% and Greater
To
ne
Pe
rce
nta
ge
fo
r E
ach
Dis
co
un
t C
ate
go
ry
Reported Discount
Reported Snapshot Discount by Tone
Positive Neutral Negative
30
• Vehicle malfunctioning
• Program confusion
• Vehicle hacking
• Customer service
Emerging themes
31
• Value proposition has to be compelling for customers
• Device options are not as important as ensuring that the options work
• Ultimate customer satisfaction is dependent on customer perception of driving ability relative to UBI evaluation
• While value added services may increase the chance of conversion, the most significant reason for trying and staying with UBI is savings
• And even after all that…
Key conclusions
32
Market awareness
33
Pinnacle driving challenge
34
Join us for the October Apex Webinar
35
• We’d like your feedback and suggestions
• Please complete our survey
• For copies of this APEX presentation
• Visit the Resource Knowledge Center at Pinnacleactuaries.com
Final notes
36Commitment Beyond Numbers
Thank you for your time and attention
Mike Chen
Gary Wang