By Mike Brockman, CEO, ThingCo
Consumers will look for real, tangible value
Only a couple of insurers took the very unusual step of refunding customers during the lockdown, based on the low claims volumes experienced. This goodwill gesture was welcomed but probably did little to help the market’s reputation. Consumers have long memories and with predictions of unemployment levels not seen since the 1980s, many will come out of this chapter in world history wanting a sense of normality but also wanting businesses to be more flexible to their needs. They will almost certainly want different, more flexible types of motor insurance covers that offer real, tangible value.
Some will question why they should have to pay an annual motor insurance premium when the car is not in use most of the time.
Others may have increased their car use in preference to using public transport due to the perceived higher health risk and/or the increased convenience of the car and want to feel safer and rewarded for driving well.
Add to this mix, the disruption to the car market with production temporarily halted, car showrooms closed during lockdown and new car sales at record lows. The UK car parc may therefore increase in age which means the latest advances in ADAS and other high tech safety features will be slower to reach drivers. That might be good news in one way as it could alleviate some of the higher claims costs associated with technologically advanced cars but the obvious downside is we may see more people hurt than might otherwise have been the case, leading to higher personal injury costs.
Telematics – but not as we know it
Telematics offers the industry an opportunity to better serve consumer needs, reduce road casualties, lower claims cost and provide fairer premiums. But not telematics as we know it today.
The industry has found it difficult to make telematics work economically across all sectors, since essentially the technology has been given away free and the risk benefit to outweigh the cost is difficult to achieve.
However, technology has developed fast and now offers insurers a way to make their telematics propositions simple, transparent and engaging, to provide consumers with tangible added-value. Machine learning, AI, video, intelligent voice – even solar power can all work together to offer greater efficiencies and a better customer experience based on real-time driving data. We no longer need to build and host huge data platforms when cloud platforms enable scalable data management.
Getting asset value from telematics
By exploiting these advances in technology, insurers can get asset value from telematics i.e. extract greater economic value from the technology than its cost. That means using the data to mitigate risk, manage claims effectively and lower costs.
It starts with making the data collection device itself desirable so that consumers value it in its own right. Low cost, smart and discreet self-fit solar-powered devices are just starting to be tested by the market to help solve the two main challenges insurance providers have always faced – the first, getting high quality data from the car to deliver behaviour-based insurance the second, getting customer interest and trust in the proposition.
If the device looks sleek and techy like other connected consumer products, does what it promises (accurate data, collision detection, voice support, smart FNOL, engagement) to make driving safer and claims less of a pain for the customer and the insurer you are already offering more and bringing costs down. Consumers have been buying dashcams in their droves so there’s clearly an opportunity to provide a device that actually gives them benefits over and above cheaper insurance.
Using solar powered devices means there is no direct connection to the car, so it is easy to fit. This all helps to position the device itself as a real premium product providing many in-car benefits for both consumer and insurer.
Telematics must deliver in lower claims
But ultimately, telematics has to deliver in lower claims loss ratios. Consumers need to be incentivised to drive safely and the data should be used to drive the FNOL process to help cut fraud, speed claims handling and deliver a great customer journey. Intelligent Voice can also transform the FNOL process, providing immediate support when it’s most needed. All this means insurance risk can greatly be reduced real-time creating a safe but miles-based product for the customer.
Bringing these elements together in one package not only makes it more interesting, it allows insurers to demonstrate how they are making the data work for the customer – they can talk about the collision response, the claims process, offer incentives for safer driving. It’s all about making consumers feel empowered.
Technology is changing; consumer needs and attitudes are changing – they need flexibility; better value, better service, better engagement. The pandemic has made as all think more deeply about what is important and insurers must take this opportunity to change the way that they think about telematics.
With the ability to help manage risk, improve the claims journey, provide fairer premiums, the next generation of telematics could turn the motor insurance grudge purchase into something consumers really start to value.
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