Why Cloud Could Push Usage-Based Insurance

Insurers offering usage-based insurance can achieve considerable operational efficiencies by embracing the cloud's scalability and flexibility when it comes to billing for services, according to Bruce McKee, financial services industry lead for Microsoft UK.

"If you think about telematics, it's a very kind of on-off requirement, so why pay for the infrastructure at two in the morning when you simply don't need it because no one is driving at two in the morning, everyone is asleep," he says. "I can't really think of anything that lends itself to cloud computing than telematics."

He also stresses the cloud's ability to provide integration with all manner of devices and platforms, giving the extreme example of Facebook and the almost 7,000 different operating system configurations, browser configurations and patch levels, and devices hitting the social networking site every month. "That's one of the things we can help with, in terms of actually removing that complexity," he says. "Our tools have to be able to handle all of that."

Finally, he considers some longer-term uses of the cloud: "I think when you stand back and think about what a car is and what you do in a car, I paid to park this morning in the same car park I always go to. Why? Why don't I just hit the geo-fence and automatically the money comes off? Why do I have annual insurance? Why don't I buy 10,000 miles worth of insurance? I don't drive very far, and that actually might be a better product for me. While we don't like toll-based motoring in this country, and I can completely understand it, it might well end up going that way, and you can see how telematics would be the hub of all of those sorts of changes in the business model. [But] you are not going to be able to do any of these without a whole stack of infrastructure to capture that data in a secure fashion and to run those analytics around it. So the cloud is going to be that big enabler of the whole business model and the whole change that is going to happen over the next, probably, 10 to 15 years in driving."

Click here for the full video interview.

Insurance & Technology is a media partner for the Insurance Telematics USA conference and exhibition which will take place in Chicago on September 3 and 4. This conference will tackle the steps needed to take UBI programs to the mass market with tips from Progressive, American Family, Ford, The Hartford, Lexis Nexis, Ford and State Auto Insurance Group, among more. Click here for more information.