Advances in Management and Applied Economics

A Comparison of Underwriting Decision Making Between Telematics-Enabled UBI and Traditional Auto Insurance

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  • Abstract

    Because of telematics-enabled UBI (usage-based insurance), real driving information can be collected and provided to underwriters. It promises more efficient pricing of risks, with widespread benefits expected to accrue to insurers, consumers and society. From the perspective of auto insurance underwriters, compare to the driving data collected by a traditional auto insurance application form , the underwriting data collected from a telematics devices more effective or not is a question and to answer. By employing prior literature reviewing and grey relational analysis, this study found most of driving behavior data collected from telematics devices is very helpful for auto insurance underwriting, some traditional data collected by an application form is still necessary for underwriters to make a well underwriting decision. The implication is, in order to improve the effective of an underwriting decision making, insurance companies need to take advantage of IoT(Internet of Things) tech to collect more helpful underwriting data as well as adjust their underwriting policy accordingly.

    JEL classification numbers: O32
    Keywords: usage-based insurance, auto insurance, telematics, Underwriting