FAIR Innovation In Insurance: Pay-Per-Mile Auto Coverage

The Future of American Insurance & Reinsurance (FAIR) campaign is highlighting the importance of risk-based pricing and the innovations happening in the insurtech space.

This fall, the Insurance Information Institute (Triple-I) attended Insuretech Connect—the world’s largest insurtech event. The annual meeting in Las Vegas showcases the new technologies which are lowering costs and creating efficiencies for both insurers and policyholders.

The growing amount of data available to insurers, for instance, is not only reducing the amount lower-risk policy holders pay for insurance coverage. It also incentivizes all policyholders to adjust their driving behaviors in exchange for lower premiums.

We’ve all heard, “you get what you pay for.” Now insurtech innovators are letting policyholders only pay for what they use when it comes to auto insurance. Technology is also speeding the claims-settlement process, so insurers and policyholders are completing transactions digitally.

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FAIR Video Series: Ensuring Policies Are Priced Fairly and Accurately

Risk-based pricing — the practice of insurers charging policyholders different rates depending on their different risk characteristics — incentivizes policyholders to reduce the chance of financial harm not only to themselves, but to those around them.

For example, through risk-based pricing, policyholders are more likely to engage in safer driving practices or invest in fire prevention measures for their homes in exchange for lower monthly premiums.

The Future of American Insurance & Reinsurance (FAIR) campaign is educating stakeholders on the importance of risk-based pricing in its five-part video series.

In this final segment, Dr. Charles Nyce, Associate Professor of Risk Management and Insurance at Florida State University, explains how incentives created by risk-based pricing will lead to safer behaviors and fairer premiums.