IoT

Connected Car service personalizes insurance using IBM IoT solution

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Connected car IoTThere are two million cars in Ecuador. Only 20 to 26 percent of them are insured. There’s no requirement  to have car insurance in Ecuador and there’s a predominant attitude that “nothing will happen.”

The average value of an auto insurance policy in Ecuador is $700, a considerable sum given that the basic monthly salary is $386. If, once the term expires, the client does not submit a claim or request assistance, the amount invested in insurance may be considered an unnecessary expense that could have been better spent elsewhere.

The 33 car insurance companies in Ecuador have been fighting for the same market share and trying to reach the same customers in a commodity market driven by price.

Considering a new approach

A standard practice is to offer the same coverage at the same price to everyone. That means there’s no real difference between a customer who is a really lousy driver and one who is a very good driver. Both have to pay the same amount of money for an insurance policy.

Seguros Equinoccial is an insurance company in Ecuador characterized by constant innovation and a permanent and deep focus on the client. We wanted to do more than provide insurance as a commodity, so our team explored options to customize insurance as a unique service for customers.

Working with IBM on “Connected Car” approach

Seguros Equinoccial worked with IBM Global Technology Services and a local business partner to develop an Internet of Things (IoT) solution that includes a GPS component. The app captures and analyzes data using Watson Campaign Automation delivered through IBM Cloud, enabling users to interact with their car to learn about their driving habits. It also includes benefits that reward good practices at the wheel.

The app records every time a driver accelerates quickly, decreases the speed suddenly, makes a harsh turn or takes any other action. The data collected is then used to generate information about driving behavior. That data is then compiled for actuaries and used to calculate more specific pricing, as well as score drivers on their driving ability and habits. Drivers opt in to use the service and are the only ones who can see their personal scores.

The program doesn’t seek to penalize drivers, but to motivate them to improve habits. There is no change in price if the rating is low, only benefits and discounts if the rating is high.

The score was developed as a pilot at the end of 2017, when Seguros Equinoccial installed the system in 500 active customer cars, gave customers the app and began evaluating eight different variables.

Today, customers receive a push notification about their score through the Connected Car mobile app (after they’ve finished driving), with suggestions about how to improve. It also generates maintenance alerts.

Once drivers begin to improve their driving scores, they earn virtual coins that can be exchanged for products, services or even a rebate on a percentage of their insurance premium.

Revolutionizing insurance with the Connected Car app

The Connected Car app is not just for actuaries to set rates, nor is it to penalize or restrict customers. It helps encourage and reward better driving.

An additional objective to the Connected Car app is to reduce the number of car accidents in Ecuador.

Learn more about IBM IoT for insurance.

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