Crimson - Intelligent Auto Insurance
As vehicle sales increase today, it effectively means more business for auto insurance companies. In other words, business for vehicle insurance companies depends directly or indirectly on new vehicles insured and insurance renewals. But what if there was a way to build newer, more innovative business models around vehicular insurance? For any business to beat competition and remain market-steady, there need to be interesting and lucrative avenues to increase profits and optimise existing systems and resources. So how can vehicle insurance companies become part of such a scenario?
Imagine a scenario where auto insurance companies can gain more commercially, even as vehicle owners enjoy cost savings. Such a business model is indeed possible, with the right technology in place. With this, business would make a paradigm shift from being just a commercial activity, to being able to relate with its customers on a more personal level. Such a model would lead to happier customers and more customer loyalty.
The key lies in our innovative solution, Logica Crimson.
What does Crimson do?
Traditional car insurance premiums incorporate a range of risk factors such as vehicle and driver history but don’t assess miles a vehicle has covered. So essentially, they charge the same premium to a driver who drives less and so has lower exposure to accident (low risk), as they do a driver who drives more and therefore has higher exposure to accident (high risk).
Crimson aims to balance this feature and make vehicle insurance more accurate and more economically viable to insurance companies, as well as its customers.
How does it achieve this?
Crimson enables Usage-Based Insurance. Usage-based insurance is based on the principle that reduced driving reduces the risk of accidents and insurance claims. So, a person who drives more, is more at risk, and so pays higher for insurance accordingly, while a person who drives less, and is lower risk, pays lesser for it.
Crimson leverages current technology to gauge complex and dynamic individual driving factors - such as distance, speed, location and time (peak/off peak hours) - to compute insurance premiums accordingly. It enables drivers to pay for their insurance just as they would use a prepaid mobile phone. Insurance can be purchased for a set number of miles.
When the car has travelled these miles, the insurance coverage expires, and can be renewed again when the user tops up by paying the insurance premium for another set of miles. Crimson provides users with options to top up their insurance premium even as they travel, using SMS text messages and the Internet.
How does Crimson work for insurance companies?
Insurance companies lose out a lot of money on claims, while not benefiting from the income obtained from premiums, under the present system of blanket premiums. Also, as per the current pricing system, only savings made from compensation not claimed are retained by insurance companies as profits, or returned to premium payers in bulk, while not opening up more avenues for them to spread out their business. Usage-based insurance covers this lacuna of the traditional system. It allows insurance companies to ensure more income as well as savings by charging accurate premiums based on vehicle usage.
This system also ends up being far fairer to all in the long run. High-usage vehicle users now pay for insurance proportionate to the miles they drive, as the risk they take is higher compared to low-usage drivers who currently pay the same fixed amount, although the risk they undertake is much lesser. This system also makes insurance more attractive for low income groups who avoid insuring their vehicles due to the high cost.
If you have any queries, contact us.
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