Let’s face it, as convenient as it is, owning a car isn’t exactly cheap. Apart from refuelling and service fees, you also need to get insurance. Its price depends on many things: Are you a good driver? Have you had any accidents? How expensive is your car? Where do you live? Or even: How old are you? Chances are any of these factors will result in a high rate of insurance.

The mobility revolution unveiling before our eyes will change that. How, you may ask. Well, the answer is technology. AI, telematics, advanced analytics and various mobile technologies — all these contribute to the change of heart car insurance companies are experiencing. The new model of insurance they’re introducing is UBI, Usage Based Insurance. That means that your rate is calculated based solely on your individual behaviour while driving.

It’s possible thanks to the communication between your vehicle or smartphone and data “receiver”, i.e. fleet manager or CFM company. From that moment your driving pattern is being constantly monitored and measured against the current driving conditions and speed limits on the roads you’re using. The better you drive, the higher score and possible higher discount for car insurance you will get.

A taste of the future is already being offered by Volkswagen Financial Services. Upon buying your car insurance, you install the InMobi app, for which you get the initial 5% discount valid for a year. During that period a new rate is calculated based on your driving style. The biggest perk is that the new price will not be higher because of your “bad behaviour”. But if your driving style is “good” the prize is worthy: up to 20% discount.

In spite of what you might think, the trick of the “pay as you drive” model might not be in the risk of higher insurance rates. The sole fact of being observed all the time might actually prompt us to drive better.

These changes will also affect the management of car fleets in companies. Here, a slightly different technology is in use. Instead of the driver installing an app, each car is equipped with a “black box”, which monitors and records the readings from sensors.

Volkswagen Financial Services experts estimate that 70% of drivers make moderate use of their cars, 20% treat them with utmost care, and 10% exploit them to their limits. Thanks to telematics and data collected from mobile devices, VWFS can analyse each of these groups and indicate drivers who generate extra costs. This will help companies save money spent on repairs and insurance.

In the future, the “driver’s fingerprint” will most likely be located on their smartphone rather than the car. This way, in case of using shared services, the relevant info can be accessed by the car provider. They can then adjust the price per km according to the risk assessment of that individual user.

For now, UBI is used mostly in Europe, in the UK and Italy, but it’s getting really popular. According to Frost & Sullivan’s analysis, by 2020 over 100 million drivers will be covered by UBI.

Volkswagen Financial Services is the strategic partner of Impact mobility rEVolution’18, which will take place in Katowice on September 12-13th.