The Insurers Federation of Egypt (IFE) has highlighted that usage-based insurance (UBI) represents one of the most prominent future trends for the motor insurance market.
The Federation explained in its latest weekly bulletin entitled “Usage-Based Insurance (UBI) and the Role of Modern Technologies in the Motor Insurance Market” that the rapid development of digital technologies and the increased reliance on big data, the Internet of Things and artificial intelligence have contributed to the development of risk assessment and pricing mechanisms, and the emergence of more flexible insurance models that rely on the actual elements of the risk instead of being limited to traditional indicators.
Telematics has contributed to a qualitative shift in the application of the UBI model, through the continuous collection and analysis of driving data, including distances travelled, speed patterns, rates of acceleration and sharp braking, driving time, and the geographical location of the vehicle.
The federation pointed out that making the data available to insurance companies helps develop more accurate pricing models, improve the efficiency of underwriting processes, encourage drivers to adopt safer driving behaviours, enhance claims management and reduce insurance fraud.
The IFE called on motor insurers to study international best practices in UBI, and design products that suit the Egyptian market.
Egypt faces three main challenges in implementing UBI models and telematics technologies, despite the opportunities these solutions offer. The challenges are data privacy and protection, regulations, and technological integration that allows the continuous flow of data and real-time analysis.
The federation also stressed the importance of coordination between insurance companies, regulatory bodies and technology solution providers, in parallel with developing the technical infrastructure and building capabilities within companies, to ensure the gradual application of UBI models.