42
September 29, 2016 Gary C. Wang, FCAS, MAAA Michael K. Chen, FCAS, MAAA State of the UBI Market The Shift to the Connected Car Business Model
September 29, 2016
Gary C. Wang, FCAS, MAAAMichael K. Chen, FCAS, MAAA
State of the UBI MarketThe Shift to the Connected Car Business Model
1
About Presenters
• Gary C. Wang, FCAS, MAAA• Consulting Actuary• Bloomington, Illinois• Pinnacle Actuarial Resources, Inc.
• Michael K. Chen, FCAS, MAAA• Consulting Actuary• Des Moines, Iowa• Pinnacle Actuarial Resources, Inc.
2
Implemented a plan
Researched a plan
No plans
Polling Question #1
A
B
C
Where is your company at in the UBI spectrum?
3
• Introduction
• State of the UBI Market
• Update on Market Sentiment
Agenda
4
• Almost all states with 10+ programs
• Increase in average discount from mid-teens into the 20%+ range
• Over 10% of the policyholders are in UBI policies
The Current UBI Environment
5
• The personal auto insurance market is UBI ready from the supply side.
– The watch is no longer on the top ten, but on the mid-tier companies.
• The cost of entry is not trivial.
– Infrastructure
– Product
– Marketing
The Current UBI Environment
6
• Mobile solutions still the talk of the town
• Rumblings on the OEM front
– OnStar with Verisk
– Ford and Nissan
• OBD Devices still in play
• Hybrid solutions taking advantage of combining OBD, OEM and mobile solutions and their ability to talk with each other
The Current UBI Environment
7
Analysis
Domain Knowledge
Process
Where Does the Actuary Fit In?
8
• Moving past capture per second
• Feature engineering beyond simple statistical (mathematical) manipulations
– Maneuver recognition
– Smoothness of driving
– Distracted driving
– Fatigue
Data
9
• GLM is too “limited”
• More flexible machine learning tools leveraged
• Increased importance in scalable algorithms for processing and modeling algorithms
Process
10
Domain Knowledge
Where Does the Actuary Fit In?
11
Whose role is it to educate the consumer on safe driving behavior?
School Training Program (Drivers Education)
Car Manufacturer
Insurance Company
Polling Question #2
A
B
C
D
E
Government Agency
Other
12
Loss Control for Personal Auto
10 20 30 40 50 60 70 80 90 100
Frequency by Decile
13
Loss Control for Personal Auto
10 20 30 40 50 60 70 80 90 100
Frequency by Decile
The desire of improving driving
behavior is to improve the
performance of the worst
decile(s).
14
Loss Control for Personal Auto
10 20 30 40 50 60 70 80 90 100
Frequency by Decile
Improvement to the worst decile,
while laudable, can lead to
premium volume decreases of
10% or more!
15
• Are we ready to embrace the new environment, one that aims to drive down human error and, with it, premium volume?
The Uncomfortable Impact
16
Does your household currently use a UBI solution for insurance?
Yes
No
Polling Question #3
A
B
17
• Consumer sentiment related to UBI
– Progressive Snapshot®
– State Farm Drive Safe and Save™
– Allstate Drivewise®
• Consumer sentiment related to Autonomous Vehicles
– Tesla Autopilot
• Implications for insurer strategies
Consumer Sentiment – Future Mobility
18
• Analysis – sentiment of social media posts related to UBI programs– Text mining
– Review of individual tweets
• Data– Over 8 million insurance
tweets total (January, 2012 to present)
– Keyword searches for terms related to UBI programs in US, UK and Canada, autonomous vehicles
Description of Analysis - Social Media Data
• Data fields
– Content of the tweet
– Specific tweet recipient
– Sender of the tweet
– Language of tweet
– Where the tweet originated
– Link to a picture of user
– Latitude and longitude of the user
– Date and time of tweet
– User profile
19
23.4%
18.2%
14.1%
13.4%
18.9%
24.4%
9.8%
12.2%
8.8%
15.8%
12.3%
16.7%
0.0%
21.9%
25.0%
31.3%
0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0%
Privacy
Misunderstanding of Program
Rate Can Go Up
Concerned About Results
2013 Study 2014 Study 2015 Study 2016 Study
Snapshot® Non-Customer Negative Responses
20
76%
14%
6%
4%
76%
14%
0%
2%
74%
7%
0%
13%
80%
2%
0%
8%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90%
Savings
Excitement
Tracking
Better Driving
2013 Study 2014 Study 2015 Study 2016 Study
Snapshot® Positive Customer Responses
21
23%
16%15%
14%
10%
4%
24%
18%
20%
11%
1% 1%
16%
8%
22%
10%
2%
0%
22%
6%
19%
14% 14%
0%0%
5%
10%
15%
20%
25%
30%
Driving Habits Beeping Snapshot Evaluation Annoying Premium Change Installation
2013 Study 2014 Study 2015 Study 2016 Study
Snapshot® Customer Complaints
22
Snapshot® Savings
2%
59%
85%
96% 94%
2%
6%
0%
1%0%
96%
35%
15%
3%6%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Zero Less than 10% 10% to 19% 20% to 29% 30% and Greater
Tone P
erc
enta
ge f
or
Each D
iscount
Cate
gory
Reported Discount
Reported Snapshot Discount by Tone
Positive Neutral Negative
23
• Positive
– Savings
• Negative
– Raised rates because they didn’t sign up
– Misinformation
– Privacy
– Can’t drive like they normally do
State Farm Drive Safe & Save™ Sentiments
24
User Error
25
17%
83%
Non-Customers
Positive Negative
Non-Customer Sentiment – Drivewise®
• Positive
– Advertising
– Savings
– App
• Negative
– Advertising
– Privacy
– Dislike concept
26
Customer Sentiment – Drivewise®
• Positive
– Savings
– Impressed by program
• Negative
– App
– Can’t drive the way I normally do
– Disagreement with results
23%
77%
Customers
Positive Negative
27
Advertising
26%
74%
Leslie Jones Commercials
Positive Negative
28
• Reaction #1
– Lack of regulation
– Backlash against media and Tesla for spinning the story
• Reaction #2
– Skeptical of full autonomy: “Guess what – YOU still have to pay attention & use common sense when driving – YOU MUST apply the BRAKES”
– Safety record
Mixed Reaction
29
Tesla – Reaction to AutoPilot Death
• Tweeted “1.3 million people die a year in car accidents. Yet 1 person dies in a Tesla on autopilot and people decry driverless cars”
• Retweeted almost 10,000 times in four days
30
Cycle
-
5,000
10,000
15,000
20,000
25,000
Nu
mb
er
of
Tw
eets
Date
Tweets Related to Death
82% of Tweets in first six days
31
Would you feel comfortable allowing an Uber self-driving car to take you on a trip?
Yes, but only with a human driver also in the driver’s seat.A
B
C
Yes, even without a human driver.
No.
Polling Question #4
32
Uber’s Self Driving Fleet
• Uber’s Pittsburgh fleet, which will be supervised by humans in the driver’s seat, consists of specially modified Volvo XC90s and Ford Fusions outfitted with dozens of sensors that use cameras, lasers, radar and GPS receivers.
• Uber runs its cars only in areas mapped in extreme detail. Those maps provide key context for the cars and let them focus on temporary obstacles like other cars and people.
33
FordPass – “Mobility” in the Automotive Industry
• Through FordPass the company can have handful of interactions with consumers each day instead of the current handful interactions each year.
• A consumer can use the app to start their car each day, call roadside assistance, locate and pay for parking and conduct several such routine activities.
• FlightCar a part of the FordPass app will be used for ride sharing, car sharing and multi-modal transportation.
• Ford sees its future as not just a carmaker but as the foremost mobility company that prides itself on having the best consumer experience.
34
• Forward Collision Warning
• Lane Departure Warning
• Rearview Video Systems
• Automatic Emergency Braking
• Blind Spot Detection
• Adaptive Cruise Control
Autonomous Tomorrow, Safety Today
35
• Tesla Model S
• BMW 750i
• Infiniti Q50S
• Mercedes-Benz S65 AMG
Semi-Autonomous Cars
36
ISS Fast Track Plus™ Paid Claim Frequency
5.30
5.40
5.50
5.60
5.70
5.80
5.90
6.00
6.10
Period (Year Ending Quarter)
Collision Paid Claim Fequency Per 100 Cars
0.88 0.89 0.89 0.90 0.90 0.91 0.91 0.92 0.92 0.93 0.93 0.94
Period (Year Ending Quarter)
Bodily Injury Paid Claim Frequency Per 100 Cars
3.35
3.40
3.45
3.50
3.55
3.60
3.65
Period (Year Ending Quarter)
Property Damage Paid Claim Frequency Per 100 Cars
37
The Learning Curve?
• With the new safety features coming online, driving should be a safer endeavor today.
• What can go wrong?
– Are drivers keeping up on proper usage of the new features?
– How engaged are the drivers with the driving task?
– What are the drivers doing instead?
– Are the drivers as experienced today as they were yesterday?
38
Questions
39
Join Us for the Next APEX Webinar
40
• We’d like your feedback and suggestions
• Please complete our survey
• For copies of this APEX presentation
• Visit the Resource Knowledge Center at Pinnacleactuaries.com
Final Notes
41Commitment Beyond Numbers
Thank You for Your Time and Attention
Gary [email protected]
[email protected] Chen
