Sharona Sagi, Director of Business Applications at Earnix, explores the future use of telematics to tap into driving behaviour and the ways insurers can respond with truly personalised services for customers.
The real value of usage-based insurance(UBI) can be unlocked by telematics solutions, and the way insurers approach these new opportunities will be a game changer for the industry. Customer scores are just the tip of the iceberg. While UBI processes start by collecting basic statistics, there is a wealth of potentially valuable information that lies behind scores and statistics—and can be used to further build the customer profile.
For example, insurers can look at which roads people take, whether they drive at night, and what features they use in their cars. This starts to augment and complement initial data sets, enabling insurers to know customers better, understand their risk profile, and develop effective offers to respond and meet customers’ needs.
Insurers can gain even more by using telematics in real time. What if they were to identify a customer who changes their parking spot to a potentially riskier area? This visibility could lead to a conversation highlighting ways the customer could park in safer places, an interaction that can lead to reduced risk for the insurer while creating meaningful, beneficial connections with the consumer. Using these types of optics gives insurance companies many more opportunities to speak to customers—beyond the point of renewal.
Creative Thinking May Influence Customer Thinking
A key issue in the industry today is how to convince customers to install telematics in the first place. There are many different reasons why they may (or may not) want to use such a device, but a typical motivator is price. Someone who is price sensitive and looking for a discount may go for a programme where they can save on their auto policy if they do not drive many miles.
The entire industry can embrace this creative mindset and think about other motivators to encourage consumers to install telematics. For instance, a ‘peace of mind’ app could be very attractive to parents who could track information about how their children are driving, or to view, in real time, if they have taken the car out in the first place. Or telematics data could be used as a way to coach novice drivers to drive safely. Offers like these cannot be replaced by another insurer simply offering a discount on telematics, because they create deeper value for the customer’s actual lifestyle.
A fast track claims app is another valuable tool in the case of a traffic accident. A crash is traumatic enough without the added burden of thinking about the claim. Using an app can make the situation smoother by guiding the user to tell them what to do at the scene of the crash and how to go through the claims process.
Insurers can also be creative with pricing. For example, they can create an offer where those customers who use the telematics app to complete the claims process will receive the money within 30 days. This type of programme can be powerful persuasion when it comes to getting consumers to install telematics.
Future Trends in Telematics
Constantina Panayidou, Head of Actuarial Non-Life Pricing at ERGO Hellas, recently spoke about telematics at Earnix’s annual Excelerate Summit. “Telematics are providing attractive solutions to customers beyond the awareness of driving behaviour and the use of loyalty programmes,” she said. “Telematics are not limited to the obvious ideas, but can help through secondary factors … such as becoming a sustainable driver, avoiding harsh braking, and achieving greater fuel efficiency.
Telematics provides the ability to locate a vehicle in real time, which explains why it is so widely used in fleet management. Yet telematics can be used as a real-time offering with additional services such as automatic collision notification and emergency medical and roadside assistance. Telematics can even act as a preventative measure against the possibility of theft or at a later stage as a mitigation solution.
The value of telematics can be taken a step further. For example, by clustering data gained from telematics, insurers can go beyond simply relating to the kinds of customers they have and begin to segment them.
Imagine the case where an insurance company has a group of drivers with high mileage and a low telematics score. This scenario now gives them a chance to think about how to approach them. How can they reduce their risk? Should the insurer give them a special offer? Should they even keep this segment of drivers on their books? These are all valid questions and key aspects to consider by tapping into the wealth of telematics data.
Capitalise on All That Telematics Has to Offer
The value of personalisation and the real promise of insurance is to work with customers about the risk they are exposed to, and ensure it is really covered. If a customer drives at night, the insurer should look to see if she is covered for 24-hour roadside assistance, and if not, promote this offer. It’s not about upselling—this type of offer truly addresses the services they need and speaks directly to the customer as an individual.
I believe that retention is far more about meeting the customer more often other than at typical touchpoints such as claims or renewal. It is about engaging with them, being proactive, and building trust through communication. This is where creative use of telematics can help: by leveraging data, using the driver’s different risk parameters, and developing the right strategy and offer for them.
This is where you can improve retention by leveraging data, using the different risk parameters of the driver, using telematics creatively.