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Q&A: By Bits co-founder, Callum Rimmer

Callum Rimmer By Bits

Insurance Post’s commercial editor, Izabela Chmielewska, speaks with By Bits co-founder, Callum Rimmer on the key drivers behind the current growth in momentum when it comes to usage-based insurance among policyholders.

Can you explain what By Bits is – and your role in the business?

I co-founded a company called By Miles with James Blackham about five years ago, which provides pay-as-you-drive insurance in the UK.

About 18-months ago, we decided to re-platform and expose the technology we run [that does] usage-based insurance. We did this so because it allowed us to make more products, quicker, but [it] also gave us the ability to allow other insurers to create usage-based propositions, whether that was nationally or internationally.

And so, we put that under a brand we [now] call By Bits. It gives brands the ability to allow external insurers and ensure techs to interact with the internal By Miles group technology stack.

What do you believe have been the key drivers behind the growth in momentum in UBI acceptance among policyholders?

The pandemic helped educate customers so that they realised that if their vehicle wasn’t being used, the likelihood of making a claim was significantly less than the premium that insurers were collecting. [Their premium] wasn’t reflective of their risk.

UBI, and certainly pay-as-you-drive insurance directly reflects the premium we collect on the usage of your vehicle. During the pandemic, many policyholders turned to other types of insurance propositions that would benefit them during pandemic. Lower mileage drivers realise that [UBI and PAYD] is a type of insurance product that works particularly well if drive less than the average number of miles per standard policy year.

This made policyholders more comfortable with the idea of the value of their data. They don’t mind sharing their data if they feel like they can either financially benefit from it or get a better experience.

In our case, we do it though premium usage and other people collect this through driving styles to help lower people’s premiums. It’s this ability to permission data on behalf of the policyholder through an app that then gives them the benefit and is what’s driving the next generation of insurance and why we firmly believe this UBI is going to be the predominant portfolio product that most motor insurance providers will have in the next five to ten years.

There is a lot of hype around digitalisation, how does UBI fit into the digital journeys that many people reading this might be on?

There’s certainly a large drive and investment into artificial intelligence and machine learning by taking the data collected from prosaic risk questions and claims data collected over time and running it through these models to create predictability.

When getting into UBI when it comes to vehicle data or mobile telematics via the app, you are creating a vast, high-fidelity dataset that allows you to build on the experience you already have and doing simpler AI and machine learning built models.

So, UBI provides data that other insurers won’t have at the moment, and, if you have a way of being able to find meaning in it by using technology like AI, then it gives a competitive advantage over other insurers.

If you are going through a digital transformation exercise currently and you are doing things with big data, then this should be a natural progression for insurers to be providing the fidelity and volume of data they need to continue with their next generation pricing journey.

What are the key benefits that UBI data can deliver for those insurers that adopt such solutions?

Data.

As long as you have permission from the policyholder and ensure it is not seen as a negative by pulling the data through nefarious means or penalising them through telematic enforcement, it gives you what you need to start creating insurance products and rating models.

This will give you a competitive advantage now as well as future-proof the business when you start to get more data from connected cars.

If you are not collecting this data and getting comfortable on how to write risk with it now, when the automotive industry moves forward again and there is more self-driving or semi-autonomous driving modes on cars then you will become increasingly disconnected and uncomfortable in the risk you are taking on.

It gives you a lot more confidence in pricing that risk moving forwards, and the products insurers build based on this risk are a lot more catered for an audience. Having visibility on this means you can make more tailored products – and the more tailored a product is, the better you can understand the risk of it and better the premium costs.

Another benefit is customer retention. When you have data driven products that are collecting in real time, you can report this data back to the customer. Insurers, therefore, create a lot of touch points with the customer. People log in and look at the app about once a week at By Bits, so we have about 50 touch points with the consumer over the year, which is drastically different than the average single engagement a year. So, by just increasing these touchpoints, these engagements will improve retentions on the whole.

What advice would you give to an insurance company that might have put UBI in the file marked “too difficult” or “will do later”?

UBI will become the predominant insurance product in years to come. Actuaries have been building models on data since the advent of insurance and if some insurance companies actively start consuming more data sorts and building more accurate models, then everyone else will have to follow suit.

If done later, you are giving your competition a competitive advantage. UBI can be something that looks like a vanilla proposition, but at renewal times there are more data points to give the customer for a better renewal price.

There has been a growing amount of coverage of environmental, social and governance, not least as a result of COP26 in November 2021; how does this play to UBI’s strengths?

All big organisations – not just insurers – have an environmental and social responsibility to society and their customers. UBI gives businesses the ability to make policyholders more environmentally aware to understand their impacts on the environment, both on a macro and micro scale.

It collects data when and where a customer is driving. We can inform them of where– and how – they can drive in order to have a positive impact on the environment around them. This can be beneficial to policyholders and society and is something that insurers have the capability of doing.

As long as insurers have access to data, its something all companies should be taking ownership of, particularly in mandatory insurances like motor where we know the environmental impact of using vehicles is significant.

Finally, what longer term benefits do you see for those insurers that embrace UBI in the here and now?

Certainly, usage data is the biggest change to insurance since price comparison websites. They totally changed the landscape of the motor insurance hierarchy in about a 20-year period with some insurers now existing which wouldn’t have then.

Some of the biggest insurers then are not relevant anymore because they didn’t adapt to the changing landscape that digitisation brought, and UBI is going to have the exact same impact. Looking at UBI in the here and now is essential for maintaining their place as a very relevant insurer in 20-years’ time.

Webinar

Want to learn more? Tune in to Post’s webinar on Wednesday 9 February where By Bits’ Callum Rimmer will discuss UBI with Ageas, By Miles, Zurich and Zego on the webinar Transitioning to usage-based insurance – what are the benefits to being in the fast lane of UBI adoption?  

Click here to sign up for the event 

 

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