UBI - Usage Based InsurTech using Human-GenAI Product Consulting - Season 2 Episode 16

Usage-Based Insurance (UBI) is a rapidly evolving sector in InsurTech, where premiums are determined by actual usage patterns rather than generic risk profiles. With Human-GenAI product consulting, insurers can develop more intelligent, personalized UBI solutions. Here are detailed scenarios showcasing how Human-GenAI can enhance UBI solutions:

1. Pay-As-You-Drive (PAYD) Auto Insurance

- Scenario: Traditional auto insurance policies often don’t differentiate between a driver who drives daily and one who rarely drives. A UBI model based on Pay-As-You-Drive (PAYD) can resolve this by charging premiums based on actual mileage.

- Human-GenAI Role: Consultants design AI models that integrate data from telematics devices (such as those tracking mileage, speed, and routes). These models analyze driving patterns and calculate premiums based on real-time data. AI-driven systems can automatically adjust policies, offering dynamic pricing based on how much the insured vehicle is used. This provides flexibility for customers while helping insurers better manage risk.

2. Pay-How-You-Drive (PHYD) Insurance

- Scenario: Drivers want to be rewarded for safe driving behaviors, such as adhering to speed limits and avoiding sudden stops. With PHYD models, drivers can receive personalized premiums that reflect their driving style.

- Human-GenAI Role: Human-GenAI consulting helps integrate AI systems that analyze driver behavior using telematics, smartphones, and in-car systems. AI models can assess data points such as acceleration, braking, cornering, and phone usage while driving. These insights allow insurers to calculate safety scores for each driver and adjust premiums accordingly. The system can also offer personalized driving tips through an AI chatbot to improve safety scores, incentivizing better driving behavior.

3. Context-Aware Insurance for Commercial Fleets

- Scenario: Fleet owners often seek insurance solutions that adapt to the real-time conditions of their vehicles and drivers. They need flexible policies that consider factors like weather, road conditions, and time of day.

- Human-GenAI Role: AI systems, developed with Human-GenAI expertise, can integrate external data like weather forecasts, traffic congestion, and road hazards to dynamically adjust premiums for each trip. For example, if a delivery truck is driving through adverse weather, AI may increase the risk assessment and adjust coverage accordingly. Alternatively, driving during low-risk hours may lower premiums. These AI-driven, context-aware systems ensure that insurance costs reflect real-time risks, offering fleet owners better control over their insurance expenses.

4. On-Demand Insurance for Gig Workers

- Scenario: Gig economy workers, such as delivery drivers or rideshare operators, often require insurance that activates only when they are working.

- Human-GenAI Role: Human-GenAI product consulting helps build AI-powered on-demand insurance models that activate when gig workers log into work platforms and deactivate when they log out. AI systems monitor usage patterns, ensuring that coverage is provided only during active work periods. By using machine learning models that continuously learn from workers’ activity, insurers can offer more affordable premiums while ensuring real-time risk coverage. The system can even adjust coverage based on external risk factors such as local crime rates or traffic patterns.

5. Behavior-Based UBI for Health Insurance

- Scenario: Individuals want health insurance plans that reward them for maintaining a healthy lifestyle. Usage-based models can offer dynamic premiums based on fitness, activity levels, and overall health behavior.

- Human-GenAI Role: By using data from wearable fitness devices, AI models assess individuals’ activity levels, sleep quality, and overall fitness. Human-GenAI consultants help design systems that adjust health premiums based on real-time data streams from wearables like smartwatches. AI-driven recommendations encourage healthier behaviors (such as increasing exercise or improving sleep habits) and adjust premiums accordingly. Insurers benefit from reduced claims due to healthier customers, while users gain more affordable insurance as they maintain a healthier lifestyle.

6. Smart Home Insurance Based on Usage and Behavior

- Scenario: Homeowners can benefit from UBI models that adjust premiums based on the usage patterns of their smart home devices (e.g., thermostats, water systems, security systems).

- Human-GenAI Role: AI models, designed with the help of Human-GenAI consulting, can continuously monitor IoT-enabled smart home systems to track usage patterns and assess risks in real-time. For example, AI can detect whether smoke detectors, security alarms, or water leak detectors are being properly maintained. If the systems are functioning as expected, homeowners receive lower premiums. Alternatively, if AI detects elevated risks (e.g., water systems prone to leaks), it will adjust premiums or alert homeowners to take corrective actions.

7. Pay-As-You-Travel Insurance

- Scenario: Travelers often purchase insurance for specific trips, but with evolving travel behaviors (e.g., remote work, spontaneous travel), a more flexible insurance model is needed.

- Human-GenAI Role: AI models analyze travelers' plans by integrating data from booking platforms, travel itineraries, and even social media. Consultants design usage-based insurance models that automatically adjust based on the duration, destination, and nature of travel. For example, the AI system could activate additional coverage if the traveler books a trip to a high-risk area or deactivate coverage when no travel is planned. Human-GenAI-powered solutions could further optimize pricing based on external factors like political instability or weather risks at the destination.

8. Smart Device-Based Usage Insurance for Electronics

- Scenario: Electronics and devices, such as laptops or smartphones, are subject to varying usage conditions. Customers might prefer insurance that reflects how their devices are used rather than blanket coverage.

- Human-GenAI Role: AI systems designed by Human-GenAI consultants track device usage, including factors like location, frequency of use, and exposure to environmental risks. These models dynamically adjust coverage and premiums based on how, where, and when the device is used. For instance, a laptop that is used frequently in a safe, home environment might have lower premiums than one carried daily to different locations. AI systems could further integrate data from environmental sensors to monitor risks like humidity, heat, or physical damage, adjusting premiums in real-time.

9. Event-Based Insurance for High-Risk Activities

- Scenario: Consumers engaging in high-risk activities (such as extreme sports, mountaineering, or skydiving) need insurance that covers them only when participating in those activities.

- Human-GenAI Role: Consultants design AI models that activate event-based insurance only when the insured engages in high-risk activities. Wearables or apps can detect when someone begins an activity, automatically triggering insurance coverage for that event. After the event ends, the AI deactivates the policy, ensuring users only pay for the time they need. Machine learning models continuously optimize risk assessment based on factors like weather conditions, personal skill level, and location, offering precise premiums for each event.

10. Environmental Footprint-Based UBI

- Scenario: As ESG (Environmental, Social, Governance) concerns grow, insurers might develop usage-based models that reward customers for reducing their environmental footprint.

- Human-GenAI Role: AI models track a customer’s environmental impact through real-time data on electricity consumption, driving patterns (e.g., use of electric vehicles), and carbon footprints. Consultants design systems where insurers can adjust premiums based on environmentally responsible behaviors. For example, customers who use renewable energy or reduce their driving can see lower insurance costs. AI systems also provide personalized suggestions for reducing environmental impact, further enhancing engagement with ESG initiatives while aligning with the insurer's broader sustainability goals.

Adaptive Insurance for Shared Economy Services

- Scenario: With the rise of shared services (e.g., car sharing, bike sharing), users require flexible insurance that adapts to when and how they use shared assets.

- Human-GenAI Role: Human-GenAI consultants build AI systems that track real-time asset usage in shared economy services. For example, when a user rents a shared vehicle or bike, the insurance activates automatically. AI models calculate premiums based on the length of the rental, driving patterns, and the condition of the vehicle. Once the rental ends, the insurance is deactivated. This usage-based approach ensures that customers only pay for coverage during actual usage while enabling insurers to manage risks more efficiently.

These scenarios illustrate the versatility and power of Human-GenAI product consulting in building sophisticated UBI solutions that are flexible, adaptive, and customer-centric.