Insurance whose premium depends on actual observed usage or behaviour, rather than on indirect category variables alone.
Usage-based insurance gathers pricing formulas based on the actual usage or behaviour 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 mutualisation, for the more pricing individualises, the less shared ignorance remains to mutualise, together with a risk of indirect discrimination and of commodification of behavioural 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 penalising risky driving.
UBI, pay-as-you-drive, pay-how-you-drive, assurance au comportement