Beyond Discounts: How to Differentiate Usage Based Insurance
It started with just a few innovative brands, changing the way insurance was done. But now, usage based insurance has taken the industry by storm. ABI Research projected that telematics subscriptions will make a mind-blowing leap from 5.5 million in 2013 to 107 million in 2018.
As a result, what was once a novel disruption is rapidly becoming a core offering, and brand differentiation is the word of the hour. Yesterday, customers were asking, “Do you offer usage based insurance?” Tomorrow they will want to know, “What makes your usage based insurance different?”
Brand differentiation in insurance telematics
Just about every usage based insurance program delivers a discount for good driving – that’s the fundamental value proposition of insurance telematics. However, to differentiate, an insurer must go beyond that.
How? According to an Epsilon infographic:
- 27.5 percent of telematics customers want a good driver discount.
- 25.1 percent want reward points and gift certificates from a UBI program.
- 57.4 percent want both.
“Consumers want to be recognized and rewarded for their loyalty and the money they spend with brands,” Epsilon Contributor Dave Edington said. “They also expect leading brands to present more relevant and personalized offers in exchange for the data they provide.”
The loyalty quotient
Based on their experiences in other industries, consumers may expect more from insurance than just insurance. To truly differentiate, insurers may need to build in personalized rewards, such as car wash coupons or other offers relevant to the driver’s geographical location.
Deloitte University Press suggests the following usage based insurance differentiators:
- Immediate feedback on driving safety
- Road condition alerts
- Roadside assistance facilitation
- Identification of lost or stolen vehicles
- Geo-fencing to allow electronic monitoring of a child or elderly parent’s location and driving behavior
Gamification is another potential point of connection and reward:
“Insurers could provide rewards for improvements in driving behavior, relative to their own performance as well as against the broader policyholder pool, certain segments, or even specific groups of individuals,” Deloitte University Press contributors said. “Insurers could thereby use telematics to make the customer experience more interactive, competitive, gratifying, and perhaps even fun—certainly not an attribute traditionally associated with insurance.”
The data is there. Now it’s a question of how to harness that data in a meaningful way to strengthen the bond between customer and brand. The answer will require creativity, but those brands that put in the brainstorming effort now will reap the benefits.
While the exact formula for differentiation is yet to be determined, one thing is for certain: As an efficient, agile, and wildly-popular communication tool, the smartphone is uniquely suited as a vehicle capable of achieving UBI differentiation. To learn more, download our free report, “10 Reasons to Unplug and Unburden UBI.”