In 2022, participation in usage-based insurance (UBI) programs doubled from what it was in 2016. Insurance price satisfaction among UBI customers was 59 points higher than overall auto insurance customers, where customer satisfaction levels have dropped to a 20-year low. The consumer shift toward UBI makes these programs even more valuable for insurance providers — and with usage-based insurance APIs, building quality apps that deliver convenience to drivers just got a whole lot easier.
Whether you’re in the business of insurance technology (InsurTech) or an incumbent auto insurance provider, the benefits are clear. Usage-based insurance products mark a new era in the relationship between auto insurance providers and policyholders.
Personalized premiums, cost savings, and incentives all lead to more loyal customers for insurance companies. But more importantly, it reimagines the customer experience and allows auto insurance to be as seamless and intuitive as all the other digital products we use.
The biggest bottleneck to this customer experience is data. It may not be surprising that most young drivers would rather not share their data with their auto insurance providers because they’re unsure how organizations use it. In fact, a survey by Zebra found that 40% of Gen Z drivers don’t know what telematics is at all.
The key to UBI success is building mutual trust with policyholders via accurate, secure, and transparent vehicle data. If you’re looking for a scalable way to reach this goal but not at the expense of your existing software development priorities, this blog is for you.
A 2022 survey by TransUnion discovered that almost half of the drivers surveyed opted into a telematics option provided by their insurers, with two-thirds reporting that they were satisfied with their choice.
A sophisticated and reliable UBI product needs mature technology. Insurance companies need to manage vehicle integrations and claims from drivers, all while keeping customers engaged and satisfied. But doing everything at once isn’t easy — especially if your specialty is building insurance products and not vehicle integrations.
A standardized car API makes it easier for insurance providers to do what they do best without compromising the quality of a software-driven experience. You can grow your business with:
Vehicle telematics allows insurance providers to automatically retrieve the right vehicle data points without policyholders installing aftermarket hardware or conducting manual data entry. Although these forms of data collection have long been prevalent in the auto industry, they’re not cut out to meet what consumers expect today — with nearly half of those surveyed by Solera wanting fully digitized processes for processes like settling their collision claims.
If insurers have mobile apps or a web portal they can use a connected car API to collect mileage data directly from a vehicle without customer intervention. This data collection method is integrated into the app’s architecture, removing the risk of delays and inaccuracies from disjointed data sources.
From a cost perspective, UBI providers use Smartcar’s API to save money and time recording mileage data on a per-use basis across 30+ vehicle brands. We can authenticate vehicles with a quick consent-based onboarding process that happens directly in mobile apps and web portals, or through a link sent in an email or text to vehicle owners.
Digitizing auto insurance doesn’t come easy. The average cost of developing a car insurance app in the US and Europe ranges from $60,000 to $180,000 — not accounting for the hidden costs often associated with in-house development, like upsizing engineering times or making up for constrained bandwidths.
These investments make it even more important for auto insurers to maximize app usage and turn it into an avenue for more customer engagement and adoption. Beyond accessing policy information, filing claims, and paying bills, insurance providers can use a standardized car API to equip their apps with user-centric capabilities like:
According to a survey by JD Power, nearly one-third of auto insurance customers in the US saw a rate increase in the past year. These hiked prices make UBI products more enticing but also introduce new concerns. Only 38% of customers said that the information collected by UBI technologies was consistently accurate.
Drivers want their insurance to be priced fairly without putting their sensitive information at risk, giving insurance providers a big responsibility to provide technology to manage these expectations. With Smartcar’s APIs, insurance providers don’t have to rely on data collected from:
As EV adoption grows, auto insurers will rethink how they price insurance premiums and explore new opportunities. A LinkedIn article by InsurTech strategist Adam Kostecki, explains how EVs “completely change the nature of the risk in ways that actuaries do not fully understand.” Factors like more driver assistance features, expensive parts, and features that have never existed before contribute to this shift.
Coupled with the fact that new EV models are rapidly being introduced to the market, auto insurers must have the means to manage and standardize all their EV data.
Electric vehicles produce a lot more data than regular gas-powered vehicles. Smartcar helps auto insurers offload the hassle of building software-only integrations for EVs and standardizing data across different makes and models. Our main job is building vehicle integrations — which means we have the resources to keep up with the EV market and ensure the reliability of each integration.
With our API, auto insurers can access data like mileage, battery levels, and location across over 100 EV models and counting, with new makes and models automatically made available to customers when ready.
– Andreas Broström, CEO at Paydrive
Insurance is part of the ‘switching economy,’ in which buyers are open to moving to a new provider if they find better rates or products. With emerging InsurTechs, incumbent insurance providers, and even OEMs exploring UBI products, drivers have no shortage of choices. Beyond premium prices, consumers can now quickly evaluate a provider’s user experience as a reason to switch or stay.
Smartcar’s connected car API helps insurance providers stay competitive by optimizing their insurance app experience and addressing the following challenges:
A big qualm consumers have with UBI is that auto insurers have unrestricted access to sensitive mobility data without their consent. With connected car APIs, insurance providers have a clear way to implement robust enterprise-grade security compliance protocols. When you integrate with Smartcar’s API, you’re also implementing the following data security measures:
Building vehicle API integrations from scratch with internal developer resources is a big undertaking. The inability to commit to these investments easily pushes companies to opt for more traditional methods like purchasing data and using hardware devices.
But direct software-based integrations with vehicles are the most reliable, accurate, and secure way to collect mobility data from vehicle owners. The need for risk-free data streams is why insurance providers use Smartcar’s API to simplify the app development experience while delivering a future-ready product for widespread vehicle connectivity and stricter mobility data protocols.
Smartcar empowers your developers with the tools and resources they need to implement a network of connected car integrations with standardized data, user login flows, and user interfaces during onboarding.
Instead of bogging engineers down with fragmented vehicle connections and limited vehicle support, UBI apps can use Smartcar to deliver services to hundreds of millions of vehicles — including 95% of EVs on the road today.
Consumers hold digital products to the same standard, regardless of what purpose they serve. If you’re used to user-friendly interfaces and an intuitive signup process for banking, shopping, and entertainment apps, why would you not expect the same from your insurance app too?
Smartcar designed our vehicle onboarding process to help apps deliver a quick, modern, standardized login experience across all compatible brands. You can use our comprehensive integration guides and SDKs to set up your app with Smartcar Connect, an OAuth2.0 onboarding flow that allows customers to onboard their vehicles to your UBI program in a few clicks.
All your customers need to do is:
A car API will prove helpful if you want to build a mobility app that checks the following boxes:
Smartcar is the easiest way to integrate mobility apps and services with cars.