Insurance Technology Featured Article

User-based Insurance Gaining in Auto Aftermarket Popularity says Frost & Sullivan

June 30, 2014

The automobile insurance industry is undergoing a silent revolution. Where risks were once assessed on the basis of age, the model of the car and other statistical data, insurers are adopting a new approach: assessing risk on the basis of real-time, dynamic data. Thus, user-based insurance (UBI) is slowly becoming the most popular service in the North American market with the automobile aftermarket a significant opportunity as recent work by research firm Frost & Sullivan (News - Alert) highlights.

UBI helps insurers as they benefit from the ability to detect and retain the lowest-risk drivers. In turn, drivers benefit from significant discounts on their premiums which can serve to encourage better driver behavior.

With vehicle owners keen to adopt good driving practices, the do-it-yourself on-board diagnostics (OBD)-II telematics applications market is expected to receive a significant boost. "Growth will primarily be driven by service revenue, as the installed base of plug-and-play OBD-II devices grows rapidly," said Anuj Monga, senior research analyst at Frost & Sullivan Automotive & Transportation.

According to analysts, services such as personal asset tracking and vehicle diagnosis will gain traction and further propel the aftermarket. Frost & Sullivan is project that by 2020 the North American Automotive Aftermarket is estimated to reach $1.6 billion.

Moving beyond UBI, connected-car insurance is a platform that empowers insurers. Smartphone applications rein in distracted driving, helping to reduce accidents and injuries. Plus, advances in M2M on-board telematics technologies are creating new opportunities for connected-car insurance.

The researchers also noted that smartphones are a low-cost alternative to OBD-II devices, as they can be loaded with applications capable of performing basic telematics features. Hence, the telematics aftermarket will have to contend with the challenges posed by the smartphone market.

However, OBD-II devices score over smartphones in terms of reliability and security. Market realities are that insurers tend to prefer in-vehicle, OBD (on-board diagnostics) dongles instead of the smartphone apps as these devices can easily plug into the vehicle's OBD-II service port. They also provide more accurate driving data, are affordable and easy to install.

"Educating vehicle owners and fleets on the cost benefits of OBD-II devices and services will be key to expanding the telematics aftermarket," noted Monga.




Edited by Peter Bernstein

Article comments powered by Disqus

Related Insurance Technology Articles

American National Insurance Company Selects iPipeline Solution

iPipeline, a company that offers on-demand marketing, selling, and processing solutions, recently announced that its AFFIRM for Annuities solution has been selected by American National Insurance Company, a provider of life and annuities products, to automate the advisor selling process. By supporting the customized workflows and streamlining the order-entry process, the solution allows financial institutions to meet their requirements for FINRA, SEC and state compliance. [ Read More ]
08/26/2014

Maryland Health Care Website to be Rebuilt

The rollout of the Affordable Care Act last year, known more widely as Obamacare, was driven, in part, by the accompanying website, Healthcare.gov. The national site ran into major technical problems from its inception, and the state exchange sites that worked alongside it were often no better. Many crashed because of server load malfunctions, and they ended up providing users with poor overall experiences that ultimately hindered, more than helped, their access to proper healthcare. [ Read More ]
08/21/2014

Summer Camp: A Paying Gig for Young App Testers

For most people, the thought of summer camp involves nature trails, canoeing, and for those of us raised on summer camp movies, payback delivered to the snooty camp across the lake or even burgeoning romance. But one summer camp actually puts young people's imaginations to work by testing apps and the like, and even going so far as to pay said young people for the time and effort involved. [ Read More ]
08/18/2014

Cyber Risk Insurance - Bridging the Gap between Insurance Providers and Companies Insured

The hottest topic in the insurance world today is "cyber risk insurance", or coverage for the response to and fallout from cyber crime and breaches. As Reuters recently highlighted, the cyber insurance market is set to double in 2014 over 2013 - heady times indeed for a traditionally slow-growth industry in search of new markets. [ Read More ]
08/14/2014
FREE Insurance Technology enewslettter.

Events

Weekly Live Demo
Contact Center Solutions

Register Today!