“Luckily, we are working with the perfect partnerships between
TRI, TIMS and Aioi Nissay Dowa,” said Micah Winkelspecht, Founder and CEO of
Gem. “Blockchain technology is the perfect tool to connect these systems that
speak but do not necessarily have a shared infrastructure and we are operating
to test this new infrastructure that can enable, create incremental efficiency
and evolve into a much larger ecosystem.”
UBI and the Future of Pay-How-You-Drive
As advancing technology facilitates new opportunities for the
insurance model, a whole world of possibilities opens up. Now that usage-based
auto insurance (UBI) has established itself as a real possibility, the
future of pay-how-you-drive and pay-as-you-drive insurance is becoming part of the
new mobility ecosystem.
For starters, in the coming years auto insurers will gain new
sources of complex data for UBI programs. Today’s consumers simply enjoy
learning about themselves, which means that each day, more and more people
enjoy monitoring themselves and lifelogging their daily routines — a movement
known as the “quantified self.” With increased wearable
options, more consumers are tracking their own activity and the wearable tech
market is experiencing unprecedented growth.
While home telematics sensors monitor houses and life or health insurance wearables help boost wellness, auto telematics will improve driver safety
and prevent road fatalities, collecting data that will be critical in the shift
toward autonomous vehicles. Mobile apps that measure driving skills and offer
improvement tips may become more popular as additional carriers offer new UBI
programs, safe driving discounts and rewards.
The future’s smart cars will be able to communicate with each
other remotely to avoid collisions and they will be able to support additional
technologies, such as mobile apps. Such ease and convenience may entice new
users to try UBI or telematics devices. And as a result, insurers will be able
to more accurately price drivers based on their real-time risk.
This technology offers drivers myriad incentives, both personal
and monetary, for safer driving. Drivers will want to improve their skills for
a lower premium and, of course, for their own safety on the roads. Considering
that insurers are forced to raise rates in response to distracted driving
behavior, the opportunity to work with drivers to improve their actions behind
the wheel will only help reduce overall costs for auto insurers. This will
create the feedback cycle through which insurers can offer competitive rates to
those who drive safely.
Consumers will also be able to leverage this opportunity for
increased control over their personal information. With so many new forms of
data measurement, consumers will have more options to choose from in terms of
how they want to track their data. Instead of going directly to an insurer’s
product, some drivers may want to measure their skills on their own before
deciding to submit their driving information to their insurer.
Where Does Blockchain Technology Fit?
Whether they are used as part of peer-to-peer insurance or not,
smart contracts built on top of a blockchain offer several benefits: they
enable the automation of claims handling, they are a reliable and transparent
payout mechanism for the customer and they can be used to enforce
For example, in the case of a car accident, a smart contract can
ensure that the claim is only paid out if the car is repaired in a garage
preferred and predefined by the insurer. Although such programs could also be
implemented without blockchains, a blockchain-based smart contract provides
unique benefits. Not only does it deliver an increased degree of transparency
and credibility for customers due to decentralization as well as automation of
reconciliation and the verification of transactions, but it also provides
substantial network effects, either in the case of peer-to-peer insurance or
when several parties are using it that would not be able or willing to do this
with a centralized platform.
"By allowing the vehicle’s sensors to collect driving data
and store it in a blockchain,” explained Kenji Fuhii, executive vice president
of Toyota Insurance Management Solutions USA, “vehicle owners may be eligible
to further lower their insurance costs by giving their insurance companies
increased transparency to reduce fraud plus granting them access to driving
data to measure safe driving habits."
For those in the blockchain space,
the automotive industry is seen as a natural fit for the technology.
“We found automotive, as much as automotive found us,” said
Winkelspecht. “The idea fits within the broader narrative of opportunities for
blockchains in the insurance sector and a conversation that one has been
involved in before regarding health insurance.”
The UBI market could be worth $123 billion by 2023 and its
consumer base could grow from 15 million to 142 million over the same
timeframe, according to Allied Market Research, making this moonshot well worth
the time and effort.
The road to the autonomous vehicle and the new mobility ecosystem
starts with these critical stakeholders.
The “Driving the
Future of Blockchains” series is presented by Gem, a sponsor of
Distributed.com. Read a preview of the series, part one, part two and part three.