When last year’s COVID-19 lockdowns caused driving to stall, American Family Insurance accelerated its development of a usage-based insurance product that aims to reward those who drive less.
Announced in early March, MilesMyWay offers low-mileage policyholders monthly premium savings of up to 25 percent. Presently offered in Arizona and sold via American Family’s agent network, MilesMyWay is expected to roll out nationwide during the balance of 2021.
Development of MilesMyWay began in late 2019 as an American Family effort to evaluate UBI possibilities using multiple rounds of consumer research to test more than 20 concepts from across multiple industries, including utilities and telecom. “Consumers were uncomfortable with an app-only solution,” explains Jenny Sankovsky, product strategy and innovation director for American Family. “They were concerned about an app’s ability to accurately measuring miles driven versus miles ridden as a passenger in other vehicles. This led us to choose a sensor-enabled concept as the winning design.”
By March 2020 the MilesMyWay project was sufficiently far along to gain accelerated status. “When U.S. driving miles fell about 40 percent during the shutdowns, our executive leadership re-prioritized MilesMyWay to take advantage of the market opportunity,” says Sankovsky. “We were asked to deliver the product by October 2020 so we could iterate it prior to a December soft launch.”
Engineered in partnership with smartphone telematics developer Cambridge Mobile Telematics (CMT), MilesMyWay is designed for those who drive less than 8,000 miles per year, or about 667 miles per month. Premiums are paid monthly, with a credit issued for each month an enrolled vehicle stays under the threshold. Policyholders who pay annually or bi-annually receive a cash payment based on their monthly utilization.
MilesMyWay is built on CMT’s DriveWell platform, which measures mileage and other factors using a combination of a smartphone app and a two-inch square windshield-mounted stick-on sensor. An API-based integration with American Family enables relevant policyholder information to pre-populate CMT’s app fields and data on mileage driven to flow back into insurer’s IT systems.
While there is no penalty for exceeding the mileage thresholds, doing so chronically may not provide the desired benefits compared with other American Family offerings. In such situations, customers will be advised to consider another option.
After assessing technology partner options, Sankovsky’s team selected CMT for its combination of commitment to the accelerated delivery timeline and various technology capabilities. This included the ability to accurately estimate distance driven when a policyholder’s phone was temporarily absent from the insured vehicle. CMT also offered industry credibility with existing deployments at carriers such as
For its part, CMT was attracted to American Family’s customer-centric approach. “During our early discussions American Family’s team demonstrated a clear focus on developing a UBI product from the policyholder’s perspective,” says Hari Balakrishnan, CMT’s co-founder and CTO. “They consistently brought conversations back to considering what they would want if they were the consumer. As a result, MilesMyWay is a unique and creative product that puts the customer at the center.”
XP methodology enables four-month delivery
With only four months to deliver the offering, Sankovsky’s team of IT and business users overcame several hurdles. One was learning extreme programming (XP) methodology.
“Although our project team was very familiar with agile, adopting XP for this effort allowed quicker cycles of iterative development,” she says. “Fast-paced proof of concepts, with business and CMT feedback, permitted frequent improvements in the integrations between our systems and CMT as well as the overall product design.”
Another challenge was determining how to adjust their design ideals to fit the delivery timeline. “For example, we placed the enrollment experience high on the launch capabilities list,” Sankovsky says. “Billing, while critical, was assigned to a post-launch product iteration. Regardless, we followed a strict priority order of work to meet 'just-in-time' functionality and allowed mid-sprint priority changes when required.”
For its part, CMT dedicated a team of data scientists, technologists and business users to the effort. “Since our founding in 2010 we’ve worked to structure ourselves like a food ingredient supplier,” Balakrishnan says. “We put flexible capabilities into the hands of our partners and then help them assemble the ingredients into the products they need to serve their customers and markets.”
By maintaining the close and continuous collaborations model pursed for the MilesMyWay launch, partners will continue refining the product throughout the coming months and beyond. “Ultimately, we look forward to adding an online option as well as providing ongoing agent support for selling the product,” Sankovsky says.
Meanwhile, adoption rates are already exceeding projections. “We’ve doubled our original expectations for the enrollment into the program,” says Sankovsky. “Agents and policyholders from across our footprint have contacted us to ask when MilesMyWay is rolling out in their area.”
