China has from 2010, become the world’s largest automobile market with more than 20 million new cars registered annually, reaching over 25 million in 2018, and will hit over 33 million vehicles by 2025
March 18, 2019 | Foo Boon Ping
While the concept of usage-based insurance (UBI) is not new, it has nevertheless not been fully embraced by the industry and consumers until now. Today, it accounts for a tiny fraction of the total number of auto insurance policies issued worldwide. In many markets, it is still unheard of.
Some of the earliest examples of this kind of insurance products may be found in the US and Japan. National General Insurance is one of the first and largest auto insurance companies to institute a UBI programme in the US back in 2004. Shortly after, Japanese auto insurer AIOI introduced a similar product in 2005. It partnered with Toyota to develop the technology based on the latter’s G-Book telematics system. The product is enabled by telematics and internet of things/ vehicle (IoT/IoV) technologies that rely on in-vehicle sensors or sensors in third party mobile devices to measure mileage and analyse driving behavior in order to assess the risk profile of the insured driver, and thus allow insurers to price premium accordingly. On the surface, this is quite a radical departure from the traditional “projected risk- or actuarial-based” insurance model and is conceptually a more equitable one, as it is based on actual usage and behavior rather than projected usage and risk profile. However, when it comes to adoption, UBI has so far fallen well short of expectations. For sure, there are practical difficulties, such as the added costs of devices, as well as psychological barriers, ie. concerns over privacy, to consumer accepting the product.
Asia Pacific, led by China, will account for more than half of the forecasted 60 million UBI subscribers worldwide by 2025
Figure 1. Forecast of active mobile UBI policies worldwide - 2018 to 2025
According to PTOLEMUS, ...
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