The prices for petrol are getting higher by the minute, but car insurances might become cheaper soon. The innovative scheme of UNIQA in Austria would take into consideration when and how often a car is actually being used. The premiums would be calculated similar to mobile phones with a basic fee and price per kilometre.

“For the first time we could calculate the insurance rate due to the actual usage of the car”, says Johannes Hajek, Spokesman of the Board at UNIQA property insurance. “People who drive less, pay less, people who reduce risks are being awarded. This is fair and might lead to a more sensible usage of cars.”

The Infrastructure
Car usage will be recorded with a combination of Global Positioning Satellite (GPS), mobile phones and IT. GPS is used to track where the vehicle is driven, the actual data of position are transmitted to a computer via mobile phone. A small in-car Navi Box comparable to a navigation system or a car finder serves as GPS-reciever and GSM sender. The computer matches the data from the navigation with a map (“mapping”). The system allows to track kilometres and the actual driving route and finally calculate the insurance premium.

Feasibility study
The first step is a nationwide feasibility study of UNIQA and IBM to find out about the preconditions for such a new car insurance model and to work out the business model. The study will start with 20 cars equipped with a Navi Box in order to show the functionality and the mapping. Furthermore broad customer surveys provided by “market” will consider customer preferences and acceptance in a early stage.

“The UNIQA project is a perfect example for innovative business models on demand”, explains Axel Preiss, Manager of IBM Business Consulting Services. “On demand business provides products and services flexible, exactly for the needs and usage of the customer as in our case for the car drivers. The new scheme of UNIQA is very innovative both from a technical as well as from a business point of view.”

Safe Driving will be Awarded
The new model might lead to more safety in road traffic too. People prefer calling someone on their mobiles when rates are cheaper. Similar drivers might prefer to use their cars mainly in safer “off peak” times and deters them from driving at higher risks.

Due to this new insurance model there could be positive effects on the environment and on economics too, in case cars are being used less and accidents and traffic jams will decline. The Netherlands already discuss tax-deduction for such insurance schemes.

Theft Protection and Emergency Calls
The solution might also include additional services such as car finder to identify and track stolen vehicles in the near future. In addition with a navigation tool and via mobile phone it could provide road-side assistance. In case of emergency at the verbal request of the driver the system tracks the car and sends for help. Moreover an updated device could detect an accident – the abrupt stand-still of a car – by itself and send for help. Companies might use such systems for the management of car pools similar to existing tracking systems. The proven UNIQA weather prediction system could be expanded to track the actual position of the car and warn the driver of upcoming thunderstorms on his route.

From Pilot to Market
The UNIQA and IBM study analyses future perspectives of the innovative scheme as well as legal situation and data security. An additional survey among 60.000 UNIQA clients will focus on the expectations and acceptance of this new insurance scheme.

The feasibility study has started mid of September and will be finished by the end of the year. Depending on the results UNIQA will decide if the project “NoVi” (usage-optimised insurance innovation) will be continued to product launch. Next step in 2006 would be a nationwide pilot with about 100 test drivers to experience technology and collect data for calculation. 2007 at the earliest the innovative car insurance might be an alternative to existing insurances in Austria.

IBM as a partner provides consulting services and selects technology, devices and partners as telecommunications companies, manufacturer of GPS- and GSM devices as well as contractors for installation of the Navi Box. During the pilot project IBM will set up the software for data reception and mapping.

Role model in Austria
Target audience of the new insurance offering are people driving few, it will be noticeably low-priced for people with more than one car and for drivers who mainly drive on motorways in off peak-time. Younger drivers who look for innovative technologies and affordable premiums are an important target group too.

“We are able to offer drivers who don’t drive that much and deliberately avoid risks a product that would be unique in price and efficiency in Austria.” sees Hajek the new product as an excellent alternative to already existing insurance schemes.