Why one carrier has been successful with UBI

While telematics hasn’t taken off industry-wide the way many were predicting it would five years ago, Intact Insurance is one of the carriers that’s had continued success with the technology.

“At Intact, we’ve been leveraging UBI (usage-based insurance) or telematics since 2013,” Chris Reid, vice-president of digital distribution with Intact, told Canadian Insurance Top Broker in a recent phone interview. “We were one of the first to market, and the first to market to offer telematics in the broker channel.”

The insurer recently launched the latest version of its mobile telematics platform, which it calls My Driving Discount. Customers who enrol in the program receive a 5% discount off the bat, and can save as much as 30% on their premium depending on their driving habits (previously, Intact offered a maximum discount of 25%).

Drivers can also earn discounts more quickly with the new program. Previously, they’d be eligible for a discount after a year of driving, but now, discounts kick in after six months.

With many insurers losing money on auto due to rising repair costs, distracted driving and fraud, Reid says that incentivizing drivers to be safer is a win-win, by reducing losses for carriers and giving policyholders a break on their car insurance.

“We’re certainly willing to give the 30% of our margin back to customers who we know are ultimately safer and deserve that benefit,” Reid said. “We think it will ultimately help reduce losses for us, it will prove beneficial for the customer and the broker, and it will help society as a whole.”

And help reduce losses, it does: Intact has seen its combined ratio improve substantially with good drivers enrolled in UBI.

“We see a 50-point gap in combined ratio between the best 30% and the worst 30% of drivers enrolled in the program,” Reid said. “We know that good drivers who enrol in the program are far more likely to stay with the program, while drivers with poor driving habits who do not earn a discount may choose to shop or go somewhere else.”

Intact currently has more than 400,000 drivers enrolled in its telematics program, and Reid says almost half of Intact’s new customers sign up for UBI.

“We think, in the future, the sky is really the limit for this,” he said. “The trend line is up and to the right, and we’ll continue to invest and make sure that this program is second to none and customers are as happy as they can be when enrolling in these types of programs.”

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This story was originally published by Canadian Insurance Top Broker.