Insurance whose premium depends on actual observed usage or behavior, rather than on indirect category variables alone.
Usage-based insurance gathers pricing formulas based on the actual usage or behavior of the policyholder, measured by sensors, rather than on indirect variables such as age or place of residence. It comes in pay-as-you-drive, pay-how-you-drive and manage-how-you-drive variants, and rests technically on embedded telematics or the smartphone. Its promise is actuarial fairness, making each pay the fair price of their own risk, and prevention through driver coaching. Its downside is the erosion of pooling, for the more pricing individualizes, the less shared ignorance remains to mutualize, together with a risk of indirect discrimination and of commodification of behavioral data.
An insurer modulates a driver's monthly premium according to their braking, speed and driving times recorded by an app, rewarding cautious driving and penalizing risky driving.
UBI, pay-as-you-drive, pay-how-you-drive, assurance au comportement