Drive Less, Pay Less: The Future of Usage-Based Insurance

One type of ‘Usage Based Insurance’ helps customers by linking their premiums to their driving habits, leading to significant long-term benefits and savings, shared Shanai Ghosh, MD & CEO, Zuno General Insurance, in an exclusive interaction with Srajan Agarwal of Elets News Network (ENN).

How does Zuno General Insurance differentiate itself in the highly competitive insurance market, and what are your key growth areas?

Zuno General Insurance stands out in the competitive insurance market by offering quick, innovative digital solutions and a customer-centric approach. We focus on simplifying the insurance process to make it easy for all age groups, providing transparent policies, and leveraging technology to enhance the customer experience. We want to build a franchise with sustainable growth and quality, and the path to that is to reimagine insurance using the three pillars of Customer Experience for sustainable advantage, innovation to create meaningful differentiation in a commoditized market and digital platform-driven efficiency which will help all stakeholders. These three pillars together are the north star for us. We believe in building our business around these fundamentals, and growth will follow. Our trajectory in the last siX years is a validation of this approach, where we have delivered 50+% CAGR in the last 3-4 years, along with equal progress on quality and efficiency. Additionally, as a brand, we emphasize sustainability and social responsibility, which resonate with our customers and contribute to our unique brand identity. We want to change the lexicon associated with Insurance by making it easy friendly and transparent.

What new products or services has Zuno General Insurance introduced recently, and how do they cater to your customers’ evolving needs?

We recently launched an EV Add-on cover, a first-of- its-kind in the insurance industry. This revolutionary offering is specially designed to provide comprehensive protection for electric vehicles and cater to their unique needs, Then we launched HealthPlus, specifically tailored to cover and benefit individuals and families at an affordable premium. This inflation-adjusted product allows coverage for up to 9 family members under a single policy, streamlining the process of managing multiple policies. This product is highly customizable to create personalized solutions for customer segments.

We also launched a unique concept called ZDQ – which is not an Insurance product yet to create awareness about safe driving and develop an objective way of measuring it. We have embedded mobile telematics into our Zuno App to create this product. Driving behaviour is closely linked to accident rate, and by enabling people to measure their driving behaviour we want to appeal to their inherent bias to improve or better their performance. And we launched an open driven challenge offering an upfront discount of upto 25% on their Insurance premium for drivers with a good score. We will soon be integrating this into an Insurance product. We have firm conviction that people can be influenced to improve their driving behaviour on the roads with the right incentives and nudges. This is aligned to our overall brand values of social responsibility along with creation of economic value.

Zuno seems to have disrupted an entire industry with the launch of PAYD
(Pay-As-You- Drive). Is it possible to have both individual and customised products?

We are betting big on the Usage-Based Insurance market, which includes distance and behaviour- based personalization. It is possible to have to create customized products for individuals. We have products that can be customised to meet each customer’s specific preferences or needs. It also allows businesses to cater to niche markets and meet diverse consumer demands. Our approach to introducing a programme that rewards individuals based on their driving behaviour, or linking it to the kilometres driven, is a significant departure from the traditional insurance sales model, where policies are sold as bundles and the engagement largely revolves around the claims. Zuno is committed to innovation, evident in our willingness to disrupt the established norms and offer more personalised, engaging products.

How can your driving record affect the premium of motor insurance policies?

One type of ‘Usage Based Insurance’ helps customers by linking their premiums to their driving habits, leading to significant long-term benefits and savings. This model promotes fairer pricing, as it ensures premiums are based on usage, how much you drive and how safely you drive. Additionally, it encourages more responsible driving, potentially reducing the number of accidents and claims, which can further lower insurance costs over time. Overall, Usage Based Insurance, which includes both distance-based ( Pay As You Drive PAYD) and Behavioural ( Pay How You Drive of PHYD), offers a cost-effective, fair, and sustainable solution for drivers.

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How does PAYD and PHYD (Pay- How-You-Drive) insurance work? Please explain with an example how better driving habits can help one save premiums. How can your driving record affect the premium of motor insurance policies?

PAYD and PHYD, also known as usage- based insurance (UBI), works by measuring
policyholders’ driving habits through telematics devices installed in their vehicles or via mobile apps using the data captured by smartphone sensors. These devices track mileage, speed, time of day, and driving behaviours like braking and acceleration. Based on this data, insurance companies calculate premiums, with safer drivers typically paying lower rates. Infrequent usage is also linked to the low probability of accidents, therefore, you can have concepts like distance-based pricing.

For instance, our Zuno Driving Quotient embedded in our App allows users to evaluate their driving skills and receive an objective score. The app uses motion detection and other sensors in the smartphone to track behaviours like sudden braking, distracted driving, and speeding, then calculates an overall Driving Score. This score provides valuable feedback on driving habits and promotes safer driving practices. Essentially, the better your driving,
the higher your score, and the more you can save on your insurance premium. We launched an open challenge where anyone could participate by downloading the Zuno app and get a driving score after 15 days to gain insights into their driving skills.