When it comes to insurance, gauging risk and premiums, every bit of data – and every mile – counts.
To that end, as Bloomberg reported, insurance giant Allstate is partnering with Ford Motor Co. that will enable data sharing through telematics.
As reported, a number of vehicles from Ford and Lincoln’s 2020 model year, sporting embedded modems, will connect with Allstate’s Milewise usage-based insurance offering.
Under Milewise, premiums are based on the number of miles driven by subscribers and is offered across 14 states.
Last week, Allstate said that it is piloting a new format for the Milewise program in Arizona, where insurance rates are adjusted weekly — where in other instances, the premium has been adjusted every several months. As reported by repairerdrivennews.com, two-thirds of drivers in the Arizona pilot have been seeing their rates tied to per-mile charges decrease on a weekly basis.
Allstate Senior Vice President Ginger Purgatorio told Digital Insurance that “With Milewise, the customer’s behavior impacts the weekly per-mile rate, and now the customer can observe their behavior and get an immediate reaction to behavioral changes” through recalculated rates. She told the site that “we had the younger urban millennial in mind, but we’ve seen some relatively good success with retirees or people who work from home and happen to not drive as much.”
The pact between Ford and Allstate follows an announcement last week that Ford would work with Liberty Mutual in a telematics offering.
“Connected vehicles have the potential to deliver new benefits to Ford customers, including the ability to help lower their insurance premiums,” Ford chief operating officer of the FordPass mobile program Kari Novatney said in a statement tied to the Liberty Mutual announcement.
In another example, Nationwide and Toyota said they would launch a telematics-based insurance solution through which “good driving behavior” as determined by data analysis can help drivers earn discounts of as much as 40 percent.
Rewards For Good Behavior?
The Internet of Things, then, is being leveraged to bring data to insurance and risk management in a way that is proactive, and perhaps, even real time. Installing the devices that collect the data effectively gives the insurer a glimpse into the way a person drives — whether speeding (or driving too slowly), braking habits, the wear and tear that comes with the everyday use of a car.
Consulting firm Ptolemus has estimated that the global usage based insurance (UBI) market saw rapid growth in 2018, to 25 million policies — and that the growth rate has topped 160 percent. North America and Europe account for the majority of those policies, where in the U.S. the number of policies has topped eight million, across more than 60 programs.
The usage-based programs represent a departure — and a bit of flexibility — from the traditional insurance premium pricing models, which looks at a slew of historical data points. That data includes driving history, and vehicle particulars (such as make and models). By way of contrast, the telematics-based model can take into account someone’s changed behavior. Consider the scenario where a driver has had a history of damage or accidents, but now has re-set their driving behaviors to be, well, more cautious. The usage-based model, it can be argued, also can give an incentive to drivers to change behaviors that are deemed risky.