What is Usage Based Insurance (UBI)? How Does It Work?

Usage Based Insurance (UBI) defines revolutionary new horizons for insurance companies. It is a new model based on a win-win relationship between insurers and customers.

What is Usage Based Insurance (UBI)? How Does It Work?

• With Usage Based Insurance (UBI), insurance companies can better manage their risks and encourage their customers to drive more safely.
• Customers who drive safely pay lower insurance premiums. 
• A mobile data unit is simply installed in the OBDII port of the customer's vehicle, which reports how much and how the driver is driving and at what time intervals, enabling the transition from pay-as-you-drive (PAYD) to pay-how-you-drive (PHYD).
• Excessive speed, hard braking, sudden stops or sudden turns, sudden maneuvers and other sudden movements can be detected thanks to the patented, sensitive three-dimensional motion sensor.
• Information such as the time of day, how much and how the vehicle is used is collected in the central software on the GSM and risk analysis and scoring is performed together with other information.
• The application is customized and specially designed according to the country and insurance companies.

What is the Benefit for Insurance Companies?

• In the current situation, driver risk assessment is not based on real field data and this leads to insurance premium generation with information that is not based on real data. Risk management remains weak due to the lack of real information and loss ratios challenge profitability.
• Usage Based Insurance (UBI) provides valuable information for risk analysis, such as how much and how the driver drives, where they drive and at what times of the day. This information provides the insurance company with the opportunity to accurately identify driving risks and risk groups and predict risk-loss ratios.
• Pioneering insurers have invaluable customer profile information that their competitors do not have.
• Accident management, instant accident warning and accident reconstruction can be done.
• When Usage Based Insurance (UBI) is introduced;
• Fair and accurate price determination is made,
• Live feedback is provided to improve driver performance and reduce risk through intervention,
• It saves the insurance company from bad and incorrigible drivers,
• The value proposition is enhanced by providing value-added service offerings around safety and convenience,
• It can increase market share by offering more accurate offers due to lower risk,

The result is an overall improvement in profitability for insurance companies, lower insurance costs for drivers and increased road safety.

Usage Based Insurance (UBI) Practices in the World

• There are more than 2 billion vehicles in the world and less than %5 have fleet management and tracking units and very few are covered by UBI.
• In Europe, 2.5 million vehicles are tracked. Approximately 500,000 of these vehicles are covered by UBI,
• According to Frost & Sullivan's forecast, the market is expected to grow 40-fold by 2018, with 20 million vehicles having telematics units within the scope of UBI.