IIR’s recent reporting on mileage-powered UBI came out of industry announcements, such as the Vehcon/Verisk partnership, as well as a conversation with Martin Ellingsworth, president of Salt Creek Analytics (SCA; Dana Point, Calif.). Our acquaintance with Ellingsworth goes back more than a decade, to when he was pioneering advanced analytics on the carrier side. Recently he founded SCA, which both helps insurance companies develop analytics strategies and practices, as well as doing research and product development for next-gen insurance analytical applications. SCA recently released Fresh Miles, a mileage-based solution for usage-based automobile insurance (UBI) that collects verifiable odometer data by using the camera on a policyholder’s smartphone (see YouTube video embedded below). Ellingsworth made his case for Fresh Miles’ economical approach to UBI, and we thought it was worth sharing with our readers.
Insurance Innovation Reporter : I understand that SCA is a consulting company as well as a product company. Give us a taste of what you’re working on.
Martin Ellingsworth, Salt Creek Analytics: As you might expect, our consulting work has been centered on big data and analytics. We are helping one client build the framework for an enterprise center of excellence in advanced data fusion and data mining capabilities that the company will use for continual improvement of its customer insights and global operations in claims, underwriting, customer service, sales and distribution. For another client, we’re helping to set the data and analytics strategy for next iteration of fraud, waste, and abuse detection and prevention solutions. We’re also helping agencies and carriers improve service and digital interactions by focusing the voice of the customer to improve transparency into what’s driving satisfaction, loyalty and profitability over the customer lifetime.
IIR: OK, let’s get down to the mileage-driven UBI question. What’s your take on Verisk’s announcement that it will partner with Vehcon on a mileage-based UBI solution.
ME: Having Verisk—and by extension, ISO—step up to the plate validates consumer data capture at the national advisory level for all states, insurance companies and agents.
IIR: What explains Verisks support for this model over the existing onboard device-based approach?
ME: Well, it confirms that there is a significant gap in coverage of existing UBI initiatives for customers with older cars. It also recognizes a solution for consumers who either don’t want or can’t fit a dongle device in their vehicle, or who consider a mobile phone tracing system as an invasion of their privacy.
IIR: Doesn’t the same critique apply to the Fresh Miles smartphone-based app?
ME: The difference is that the Verisk/Vehcon takes the data away from the policyholder and does the work on the server. The Fresh Miles approach keeps the customer in the loop with a “what you see is what you type” innovation for digitizing the image data for straight-through processing—including billing—keeping the consumer in control. The Fresh Miles customer retains rights to the data and keeps a copy in their phone.
IIR: OK, so consumer ownership is part of the value proposition?
ME: Yes, and ownership of the data has practical advantages: the Fresh Miles server acts as an exchange where consumers can make their data available to agents, carriers and raters. The consumer can use their collected historical data to shop for insurance, as well as to validate miles driven for rating or underwriting of a replacement vehicle. A carrier or agent could brand the app to their existing services as a developer kit, but the data on the server could still be leveraged by consumers for getting the best rates on verified mileage-based insurance programs. I think that kind of transparency in the insurer-customer relationship will increasingly be valued by consumers.
IIR: How does the Fresh Miles approach ensure accuracy and validation? Couldn’t a policyholder send a fake picture?
ME: It’s true that a picture-taking app could potentially be gamed by taking pictures from a catalogue of recorded images. Similarly, when it comes to other smartphone-based approaches, a phone could be left home on journeys, carried by someone else or be disabled—including by the battery just running out. However, the feasibility of this kind of falsification on a large sale is unlikely, especially if repeated recent images are taken. Over time, having stock images reused by many policyholders would be detectable through reverse image searching.
IIR: So, the Verisk/Vehcon seems to have been a powerful validation of the smartphone-based UBI concept. What else would constitute good news for this UBI direction?
ME: I hope to see to see the rest of the country require miles as a rating factor, as only California does today. ISO, AAIS, or any sophisticated carrier could make verified miles programs instantly available to give consumers a way pay for what they drive as their driving habits change. Think, for example, of all the retirees still being billed under the original assumption of their 12,000-mile-per-year commute during the 20 or so years of their retirement.
[Below: Fresh Miles’ smartphone based odometer capture process.]