UBI Auto Insurance Pricing Model Based on Driving Behavior

Purpose/Significance With the advent of the 5G era, pricing based on driving behavior rather than mileage will become the key to auto insurance pricing. Reasonable UBI auto insurance pricing not only helps actuarial fairness, but also facilitates the popularization of UBI auto insurance. Design/Methodology Based on the driving behavior data of the UBI insured, an ordered logistic model of the influencing factors of the number of claims is constructed. Findings/Conclusions The empirical results show that high-speed driving, rapid acceleration, number of violations and mileage have a significant positive impact on insurance claims. Sudden braking and sharp turns have an insignificant effect on the number of insurance claims. Among them, sharp braking will decrease and sharp turns will increase the number of risks. Based on the probability distribution of the insured at each claim level predicted by the logistic model, the expected number of claims without luck disturbances can be obtained. Taking the ratio of the expected number of claims of the specific insured and the average number of claims of all the insured as the weight, it is possible to implement driving behavior-based pricing that is better than current NCD pricing for auto insurance.