Why is the premium for driving 5000 kilometers and 50000 kilometers the same every year? Why is the premium for commuting to and from work in the city the same as for frequently commuting off-road vehicles? Why is the premium for a novice driver who has just obtained a driver's license for 2 months the same as for an experienced driver who has been driving for 20 years?

Perhaps you have long been accustomed to the pricing model of traditional car insurance, but when you see the above series of questions, you will realize that it actually has a considerable degree of irrationality. At present, almost all insurance companies' car insurance premiums depend entirely on the purchase price of new cars. With the gradual pilot of commercial car insurance reform, UBI (Usage Based Insurance) will become the main mode of car insurance pricing in the foreseeable future.

In fact, UBI car insurance has been implemented abroad for several years, and its business model originated from PAYD (Pay as You Drive). PAYD is an effective attempt to price car insurance rates, but it is not a true UBI, because driving distance is not the most important reason for car accidents, and the driving behavior of drivers will have a significant impact on the probability of car accidents. At present, companies such as State Farm and Progressive have collected driving data from car owners by installing onboard hardware to make more accurate judgments on the probability of car accidents and policy pricing.

The rich and diverse UBI car insurance models abroad have illuminated the path of domestic car insurance pricing reform. The UBI car insurance product launched by China's largest Internet of Vehicles company, Srun Tianlang, has emerged in this era. Currently, it has been promoted in Beijing, Shanghai, Guangzhou, and Shandong, and will open up UBI car insurance business in more cities in the future.

Use Based Insurance (UBI): pricing based on the risks inherent in driving behavior;

Pay as You Drive Insurance: priced based on the mileage of the consumer's vehicle; Provide other services such as theft recovery, accident warning, and information services.

For consumers, the greatest value of using UBI insurance lies in significant savings in premiums.

Customize insurance services according to needs (Pay as You Drive Insurance): improve claim processing efficiency and information transparency, and obtain value-added services (theft recovery, accident warning, or information entertainment).

For insurance companies, UBI insurance makes real-time risk assessment and precise pricing possible. Insurance companies can also proactively choose low-risk drivers, reduce claims management, and proactively prevent claims accidents. In addition, providing differentiated products and services can help insurance companies create unique features and gain value-added benefits. However, considering policies, data accumulation, and the impact on industry profitability, we believe that there is a lot of uncertainty in UBI products and pricing.

Globally, the scale of UBI car insurance has been steadily increasing, but its penetration rate in most markets is less than 1%. The most successful UBI markets in the world are in Italy and the UK, which are value driven outcomes. The current situation of high premiums for young drivers or those with poor driving records in the UK is that UBI car insurance can significantly reduce the price of car insurance. Italy's car insurance fraud is severe and requires UBI technology to assist.

Given that the construction of the Internet of Things requires large-scale equipment investment, insurance companies need to extensively engage in ecosystem cooperation, collaborate with equipment providers, service providers, and communication operators to launch a certain product or service, and achieve a win-win situation for multiple parties. Although we believe that insurance companies are not natural carriers of cross-border cooperation, insurance companies should actively strive to play the role of promoters of the ecosystem, which is the key to success.