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Telematics-enabled, usage-based insurance (UBI) programs such as pay-as-you-drive (PAYD) and pay-how-you-drive (PHYD) are ubiquitous and growing across geographies. However, the current state of UBI fails to factor in the evolution of regulation, technology, and consumer behavior resulting in inaccurate pricing and lost opportunities. Insurers need to take a mobility centric approach ushering in a shift from a pay-how-you-drive to a pay-how-you-move (PHYM) model in motor insurance.

Some of the critical aspects that insurers will need to focus on to define their strategy include:

  • Transparent pricing strategy: Consumption based approach to reduce expenses
  • New consumer behaviors: Adoption of a well configured PHYM product to cover varying risks
  • Digital technology enablers: Insurance telematics enables increased accuracy of scoring models
  • Minimal data mindset: Storage of anonymized data only
  • Data analytics: Data provision from advanced driver-assistance systems

 

 

Kamesh Meduri 

Enterprise Architect, Insurance Technology Group, BFSI, TCS

Venkat Seshadri

Head, Insurance Research and Innovation, BFSI, TCS