The debate over whether or not to grant drivers’ licenses to undocumented workers is famously heated. In fact, we’ve explored the politics and opportunities involved in licensing undocumented workers before.
Opponents assert the need to enforce immigration laws, and they reject the notion that those who’ve come here illegally should be allowed to participate in society. Proponents point out that the labor immigrants perform is essential to our economy, and that it would be inhumane to deprive them of necessities such as driving, renting a home and managing their finances. Allowing undocumented workers to obtain drivers’ licenses also stands to make the roads safer and enlarge the customer market for insurance.
What do states currently allow? The following summaries come from Numbers USA.
- In most states, immigrants must prove they’re here legally before they can obtain a license, which is synced to expire with their visa (or other authorization document).
- In Oregon, Alaska, Nebraska, New York and much of New England, there are loopholes, and drivers licenses and visa expiration dates aren’t synced.
- In Utah, immigrants don’t have to prove they’re here legally, but drivers licenses and visa expiration dates are synced.
- In Washington, California, Nevada, Colorado, New Mexico, Vermont and Maryland, immigrants don’t have to prove they’re here legally, and expiration dates are not synced.
Could telematics provide a fit for immigrant drivers?
In states where undocumented workers can obtain a license, telematics offers a way to obtain affordable insurance as well. It’s particularly suited to the needs of this largely low-income, and often unbanked pool, because it gives policyholders the ability to adjust what they pay by how they drive.
In so doing, it empowers insurers to attract a flood of new customers (1.4 million in California alone, for example) who are eager to integrate with society as soon as possible.
Should undocumented workers be licensed? That’s a question we’ll leave to the legislators. Once licensed, how should they be insured? There, we can offer some insight: by telematics, most definitely.
To learn more about how auto insurers can capture underserved market, download our “Survive and Thrive” report.
Anyone who knows a thing about telematics knows that it can score driver safety. That’s part of the essential value proposition, and for several years now, insurers have been leveraging this capability to hone their accuracy in risk assessment and calculate premiums more effectively.
Drivers, have also benefited, as the same smartphone app that delivers their coverage can also detect when their driving is suboptimal and offer feedback and scoring to inspire them to improve.
None of this is news. But it sets te stage for a development that is at once both straightforward and groundbreaking.
Allstate just filed a patent application for a driver safety scoring system that would analyze a variety of telematics data (including “speed laws, road signs, traffic signals, weather and possibly even biometric data such as your heart rate,” said Amy Danise at Insurance Thought Leadership) and use the results to determine what type of insurance a driver can buy, at what cost.
When telematics data first came onstage, thought leaders knew it was only a matter of time before that data would be put to a variety of new uses, disrupting the industry and opening up new possibilities for how insurance is bought and sold. This is one of those possibilities.
To be clear, it’s not the scoring system that’s novel. Other companies have already built various versions of their own. LexisNexis has one, Danise said, for example. Rather, it’s the idea that one could weave driver score into the sales funnel itself, using it to match customers with policies to premiums.
Questions follow. For example, if drivers opt out, should insurers who’ve adopted this type of plan-selection require them to pay more? Let’s explore that.
No, people shouldn’t pay more for opting out
On one hand, it’s not smart to force one’s customers to do anything they don’t already want to do. Those that do run the risk of driving customers into competitors’ arms. And while driver scoring is indeed a popular draw, were the feature to be associated with the notion of penalty, it would not be smiled upon.
“If you tailgate, speed, drive through high-crime neighborhoods or even drive at night, insurance companies might be able to justify charging higher rates, regardless of whether you get a ticket or cause an accident,” Danise said - and no one wants to divulge information that could result in having to pay more.
Yes, people should pay more for opting out
On the other hand, to ask someone to pay more for opting out isn’t the same as giving them no option at all. It is, rather, a way to nudge them in the direction you wish them to go while respecting their preferences on the matter.
Now, in cases where that wish is entirely one-sided - where some new development would be great for the insurer but not helpful at all for the policyholder - it would be unwise to push it. But in the case of driver scoring, customer sentiment is overwhelmingly positive.
“Many consumers seem interested in getting driver scores and improving their own driving,” Danise said. “In March 2015, LexisNexis asked slightly more than 2,000 consumers whether they would be interested in a smartphone app that measures their driving score and offers ways to drive better, without any insurance discount. Fifty-nine percent said it would be nice to know their score, and 50% liked the idea of improving their score.”
True, some laggards will never willingly join the scoring party. But one mustn’t look to laggards for leadership when considering how to shape the future of the industry. As the business model changes, what’s disruptive now will evolve into the new normal. It would be a waste not to channel the insights that safety scoring offers into one’s business model. And one way to nudge customers in that direction is to ask them to pay more if they opt out.
Interested in seeing your driving score? Sign up for a Driveway Software pilot.
First there was UBI, promising to drop auto insurance premiums by 10-15 percent.
Then came driverless cars to drop them again, this time by as much as 40 percent.
UBI has been around for some years now; driverless cars, not so much. They’re only now poised on the verge of the market. Yet both innovations represent a blow to insurance premiums, and here in that fleeting moment between the old one-two, it’s fair to wonder how the industry is going to respond.
Driverless cars about to make premiums cheaper
According to a new Ptolemus study, we’ll be seeing 380 million vehicles that are semi- to fully-autonomous on the road by 2030. “This might sound optimistic, but in fact all the signs are showing a rapid progression of ADAS features in the vehicle, and regulations will accelerate that trend further,” said Thomas Hallauer at Ptolemus.
Autonomy is good for PR, and the news isn’t just coming from the luxury brands. Mid-market manufacturers including Nissan, Ford and GM are jumping into the current as well.
All this autonomy is slated to bring the crash rate down. Thanks to advanced driver assistance systems (ADAS), accidents could be reduced by over 30 percent. Frontal collision avoidance could reduce losses by 50 percent.
This, in turn, will bear an impact on the cost of insurance. From 2023 on, we can expect premiums to take a steep dive. By 2030, they may cost up to 40 percent less.
What does this mean for the auto insurance business model?
Cars are getting smarter; auto insurance must follow suit.
“Insurers without telematics and UBI offerings will succumb to the pressure of a smarter world,” said Joao Lima at Computer Business Review. Those who continue to rely on a conventional business model are likely to bear the brunt of negative customer selection and “growing imbalances” in their portfolio.
Perhaps, at the moment, this seems all very theoretical. Perhaps the advent of driverless cars feels like a far-off reality. Perhaps, at the moment, it still is.
Yet in this case, “far off” does not mean “uncertain.” Driverless cars are making their debut now. Their emergence is sure. “According to [Ptolemus], the emergence of autonomous vehicles is irreversible, as several advancements have been done in the space over the last few months,” Lima said.
Insurance telematics, too, is gaining momentum. By 2020, there will be almost 100 million vehicles around the world insured under telematics policies. By 2030, nearly half of the world’s vehicles will have telematics coverage.
This is not bad news. It is, however, a change. The insurer’s business model will necessarily adjust, as insurers evolve into their new role: “from cure to care,” as Lima put it. “Protection will become the goal as insurers seek to avoid accidents altogether through tariff incentives, driver feedback and ADAS functions.”
Time is of the essence. Now is the time to think carefully about the opportunities you’ll pursue in the driverless, crash-free, usage-based world.
Want to know more about the difference between hybrid and smartphone telematics options? Download our all new “Stack-Up” report here.
Probably nothing in the insurance industry is as crucial or as delicate as the claims process. There’s a lot riding on it. There’s a lot that can go wrong for both customers and insurers. Now, insurance telematics is redefining claims on both fronts.
Claims and customers: satisfaction at risk, churn to follow
In the conventional business model, customers interact with their insurer only every 6-18 months. In any other industry, that interval would seem geologic in scale. Those long silences are only interrupted when there’s bad news to report: when a customer has to file a claim. With so few interactions to start with, a negative experience in claims can wreak havoc on retention.
Even when things go smoothly, the claims process brings churn. “Although a large majority (86 percent) of insurance customers who have submitted a claim in the past two years are satisfied with the way it was handled, 41 percent of those who have submitted a claim are still likely or very likely to switch to another insurer in the next 12 months,” Accenture reported.
Claims and insurers: costs and liabilities pose a challenge
Of course the claims process matters to insurers, too. The First Notice of Loss (FNOL) interval is never as speedy as one would like. Claims fraud is a perennial risk. Controlling the costs and liabilities involved hinges on the speed, quality and amount of evidence you can gather.
Telematics provides notable relief on both counts, for customer as well as insurer. For the customer, it can make claims painless, while facilitating the communication they need in order to manage expectations. (That in itself is a major component to customer satisfaction, J.D. Powers found)
Meanwhile, telematics empowers insurers with real-time, actionable data they can use to expedite the process and, if desired, to strengthen their bond with customers by selling additional services.
Why Discounts May Not Drive Demand
In a recent Insurance Thought Leadership article, Ami Mintzer (head of big data and client development at Viasat Group) expressed some doubt about insurance telematics. Does the ROI make sense? Do the benefits pull their weight?
According to Mintzer, telematics is a valuable innovation, but the business model is all wrong. As long as insurers use it to offer discounts only, the results will be unimpressive. To fulfill its potential, telematics has to do more. It has to shower customers with the value they want most: it has to deliver a feeding frenzy.
“To encourage dolphins to do their show, you must feed them with fish continuously,” Mintzer said. “The same is [true] with customers – if you’ll pardon the analogy. You must keep them engaged and provide them monetary value on a daily basis.”
If “discount” is the first word that pops into your mind when someone says “UBI,” you’re missing out on the full potential of telematics. The key word here is really “value.”
If you’re using telematics for discounts only, you’re missing out
Ah, the discount. It was the first idea to draw people, both insurers and policyholders, to telematics, but like many first ideas, it wasn’t complete.
Shaving a few dollars off an insured’s policy just isn’t enough to wow anyone. For drivers, an isolated discount doesn’t provide enough draw to earn their participation, and for insurers, the ROI doesn’t make sense. While they might gain a few good drivers by offering a discount, the price-cut by itself doesn’t improve the driver pool enough to offset the upfront investment.
It quickly became clear to telematics stakeholders that the purpose of telematics had to be much bigger.
Which telematics benefits really do pull their weight?
- Real data provides more-accurate risk assessment. Fact: analytics is more accurate than guesswork. Telematics allows insurers to base risk assessment on reality, unlike the proxy factors they used to rely on before telematics data was available.
- Data-driven pricing appeals to customers’ desire for fairness as well as their belief in above-average driving skills. In other words, accuracy is more than just accuracy: it’s a benefit, too. By assuring customers that you’re treating them fairly and, at the same time, demonstrating confidence in their skills behind the wheel, you incorporate two powerful motivators into your messaging.
- Smartphone telematics apps can be designed to strengthen the customer/insurer relationship via frequent, personalized messages. Telematics moves the conversation from once a year or less to a few times a week. Repeat contact is a proven way to strengthen brand adhesion. “The more contacts made with a customer, the ‘stickier’ that customer becomes,” according to a whitepaper by Aspect.
- Driver feedback and scoring can motivate average drivers to become good drivers. Insurers don’t necessarily have to attract new customers and kick others out in order to improve their driver pool. Telematics makes it possible for the drivers you already serve to improve their skills. Drivers in a recent survey said that the safe driving concept was by far more important to them than the possibility of a discount.
- Value-added services can be integrated to bring customer experience to a new level. Free carwash, anyone? How about a complimentary latte? When you tie low-cost perks to good driving, you can incentivize good behavior on the day-to-day. Build the reward into the experience of using the smartphone app, and instantly, the value becomes emotionally compelling to drivers.
- Young driver monitoring can appeal to parents’ desire to hold kids accountable to family driving rules. For families with teenage drivers, this is a big one.
And if you choose to offer a discount on top of all that? Your policyholders surely won’t complain. But bear in mind, it’s not the discount they’re after. It’s the whole experience. When you deliver, you’ll discover the telematics feeding frenzy. Download our Survive and Thrive white paper to learn more.
There’s a new trend on the table in auto insurance, made possible by telematics: the shift from indemnification to mitigation.
Indemnification simply means that insurers will bear the cost of covered losses for their policyholders. Mitigation, meanwhile, has a more preemptive goal: to reduce the risk of loss occurring in the first place.
This month, Jeff Goldberg at Insurance Networking News pointed out that with a plethora of cheap sensors and connected devices at our fingertips, companies are deploying the tools to leverage data in new and meaningful ways – so much that it may even change the way business is done. Which products insurers sell, and how, owes much to the predictive data they have to work with.
“In the future, consumers will buy insurance … not just for the indemnification or risk but for additional risk mitigation services,” Goldberg said. “Risk is never going completely away, but in different areas it will be greatly reduced.” Auto insurance was what he called “the most obvious example.”
Auto insurance: the most obvious example
- With automated and partially-automated cars now trickling into the market, we’re seeing innovations like sensor-driven collision avoidance, pedestrian detection, emergency braking and more.
- With smartphone insurance telematics, insurers can already lower loss ratios by incentivizing safe behavior and coaching drivers to improve their habits.
- With location data, insurers can crack down on fraud faster and fact-check accident reports.
Simple enough to say, but revolutionary
“This shift from indemnification to mitigation is a move away from how insurers have done business for hundreds of years,” said Goldberg. Until recently, it’s been impossible for insurance to actually prevent a loss from occurring; rather, insurance is what policyholders relied on when their worst-case scenario happened to come true.
Now, however, insurers can offer services to help prevent the loss in the first place. The driver scoring and time-sensitive driver feedback that smartphone telematics offers is a perfect example.
Goldberg was quick to add that the shift is also in the best interest of the insured. No one wants a loss; that’s something insurers have always held in common with policyholders.
The move toward mitigation is also an opportunity to provide “more and better service.” For example, when an insurer deploys smartphone telematics, a world of customer satisfaction opportunities opens up in the form of value-added services.
Data-driven organizations are on the rise
Goldberg’s prediction aligns with another trend shaping analytics strategy for 2016: the rise of the insight-driven organization.
“Business leaders are beginning to take serious steps towards the insight-driven organization (IDO), which goes beyond the selective use of insights to fuel decision-making in individual parts of the business,” Deloitte reported. “It deploys a tightly knitted combination of strategy, people, processes and data to drive competitive advantage and improved operations.”
Strategy, people, processes and data: it’s what the future looks like. To learn more about how insurance telematics can drive down loss ratios, click here. You may also want to download our “Survive and Thrive” white paper.
Fasten your seat belts … insurance criminals are innovating again! Below are the latest trends in the world of insurance fraud, and the secret weapon (otherwise known as insurance telematics) that could potentially stop them in their tracks.
Swoop and squat
This refers to a staged accident, real or fictitious, commonly executed by organized crime rings. Lest you hear “organized crime” and start imagining salty mafia types, let’s be quick to add that the bosses are usually doctors and lawyers.
Detecting this type of fraud can be a real challenge for claims investigators, who may struggle to prove that a collision wasn’t an accident. “It’s tough,” said Christopher Tidball, a Property Casualty 360 contributor. “The first critical element is to inspect the damaged vehicles. If the damage, paint transfers or metal striations don’t match, the collision probably never took place.”
Alternatively, they can rely on the data collected from insurance telematics to confirm or disprove the validity of an accident. “The more information that can be gathered … the higher the probability of success,” Tidball said.
And success is possible, by the way. Case in point: Mikhail Zemlyansky made the Coalition Against Insurance Fraud 2015 Hall of Shame when he was pinned with an attempted $279 million in fraudulent claims from wrecks both real and fictitious.
The tow-away blues
Faking wrecks is one way to commit fraud; charging outrageous prices for towing and body work is another. In a tow-away scam, a dishonest firm will monitor police frequencies, show up at the scene of an accident, convince the driver to let them tow the vehicle, and take it to a dirty body shop, which overcharges the insurance company to fix the car. In fact, sometimes they damage the car further. Drivers who carry smartphones have some protection against that tactic: they can document the damages themselves with photos immediately following the collision.
Drivers who get insurance coverage via smartphone telematics are also protected from another type of towing scam, in which a bad firm confiscates a car parked on private property and holds it hostage: telematics provides proof of garaging address.
The not-totally-illegal fraud
Rate evasion is easy, and to make things worse, it’s not illegal in some States. In this scheme, a driver simply registers and insures their car across State lines to get a lower premium. In one example, a mere eight miles made a difference of about a thousand dollars.
Make no mistake, rate evasion is fraud, and fraud is against the law, generally speaking. However, not all legislators have made a firm stand against it, so the penalties are not as painful as they could be. Thanks to grassroots campaigns in affected areas, hopefully that’s about to change. Thanks to telematics data that tracks a vehicle’s garaging address, insurers don’t have to hold out for “hopefully.”
Insurance fraud, a revenue stream for crime rings
Insurance fraud is an $80 billion industry in the U.S. It’s also a handy way for transnational crime rings (including terrorists) to fund their other exploits.
“According to the Coalition Against Insurance Fraud, growing symbiotic connections among cartels trafficking drugs, terrorists, cyber thieves, mob syndicates and organized insurance fraud are using one another’s skill sets to profit in the belly of the underworld,” reports Property Casualty 360. What can make this relatively-easy income harder to bring in? Two words: big data.
Which brings us to the good news. Thanks to a storm of recent innovations, such as insurance telematics, insurers are becoming empowered to thwart criminals and soft fraudsters alike: leveraging data to identify fraud when it occurs, follow up on suspicious activity and respond decisively when needed. We’ve seen it again and again. Crime does best in the dark, after all. Trust telematics to turn on the lights. Learn more about how telematics can work for your company by downloading our “Survive and Thrive” report.
Distracted driving is a well-documented problem. In fact, it’s the most prevalent reason that drivers crash. The 100 Car Naturalistic Driving Study (which was the first large-scale study to collect pre-crash and near-crash data) found that 80 percent of crashes studied involved an inattentive driver.
Today, with smartphone ownership reaching saturation, perhaps it’s no surprise that the problem has gotten worse. “It’s interesting to observe how the number and types of distractions available on cell phones have grown over the years,” said Chris Mullen, director of technology research at State Farm.
On that note, an annual State Farm survey just released some alarming findings on drivers’ use of hand-held phones. While the percentage of those who talk on the phone while driving has gone down (from 65 percent in 2009 to 51 percent last year), texting has held steady (31 to 36 percent), and surfing the web has more than doubled (from 13 percent to 29 percent).
As smartphone-related distractions continue to increase and new, potentially-dangerous behaviors keep emerging, it’s imperative to find a way to fight the distraction trend. Yet according to drivers surveyed, most of the consequences that could make them change their behavior are things we all want to avoid: collisions, financial penalties and legal consequences.
It turns out the source of distraction may contain the cure. When smartphones are used for insurance telematics, they become a powerful tool to work against the distraction temptation. We’re referring to driver coaching: here’s why it works.
1. Creating accountability is a powerful way to change behavior.
A smartphone app can detect signs of distraction (for example, higher-than-average braking per 100 miles) and send drivers feedback. Changing one’s behavior is much easier when you know that someone (in this case, your smartphone) is creating accountability.
2. Immediate feedback makes learning easier.
It’s called trial-and-error learning, and according to numerous studies, the sooner the feedback comes, the better. “When people are trying to learn new skills, they must get some information that tells them whether or not they are doing the right thing,” said Professor James Pennebaker of UT Austin. Driver coaching apps can provide feedback at the end of each trip.
3. Rules become fun when you turn them into a game.
“To put it simply, gamification incorporates fun and an element of competition,” said Kristen Matthews, marketing and community manager at GroupHigh. While she was referring to gamification in marketing, the same principle holds true for driver coaching. Rules are dull, but challenges? Those are exciting.
4. Keeping score makes self-improvement addictive.
A 2014 study found that 90 percent of drivers using insurance telematics engaged with driver behavior feedback, checking their feedback 14 times a month on average. In the same study, the crash rate among young drivers who adopted telematics dropped from one in five, to one in eight.
5. Driver coaching allows you to build in rewards.
Customers who don’t drive distracted should reap the benefits. Incentivize attentiveness with encouraging smartphone messages and a better driver scores for real-time payoff. If desired, you could also sweeten the deal with a premium discount.
According to State Farm, 30 percent of drivers surveyed want to drive safely and be a role model for others. Smartphone driver coaching can appeal to that motivation and help them achieve it. For the insurer, that translates to a lower claims volume as well as a stronger customer relationship - while making roads safer at the same time.
Recently, Pew Research released the findings from some surveys that it conducted on smartphone versus broadband adoption in 2015. Two days later, Market Watch published an article on the sustainability (or lack thereof) of automobile ownership, given the high costs and gross inefficiencies. The common thread between the two? Smartphone telematics is hotter than ever. What does that mean for insurance telematics? Let’s take a look.
Smartphone adoption on the rise
Smartphone adoption is remarkably strong right now. Just compare it to broadband. What’s the percentage of Americans with broadband Internet access at home? Pretty much what it was the last time we checked, and that’s big news.
For the first time in 15 years, in other words, the adoption rate for home Internet has plateaued. Actually, it’s dropped: down to 67 percent this year, from 70 percent in 2013. That’s about where it was in 2012. It’s like home Internet just traveled back in time three years.
At the same time, smartphone adoption forges on unchecked. In 2011, 35 percent of American adults owned a smartphone. This year, it’s up to 68 percent, neck in neck with broadband.
Incidentally, we’ve also seen an uptick in the number of Americans who’ve foregone broadband altogether, getting their home Internet exclusively now via smartphone. These smartphone-only individuals were at 8 percent in 2013. Today, they’re at 13 percent.
Bottom line, the balance is shifting. Broadband is slowing down; smartphones are on the rise. In fact, smartphones are actually edging into broadband territory.
Now, no one’s predicting that smartphones are going to replace broadband or make it obsolete. That’s not the point here. What’s remarkable is how thoroughly smartphones have established themselves as a multi-functional, lifestyle-driving, all-in-one tool for an overwhelming number of Americans – to the extent that smartphone-delivered Internet has disrupted broadband, of all things.
Where insurance telematics is concerned, it’s clear which way the wind is blowing. With smartphone adoption this robust, it’s more than strong enough to build a distribution channel on. In fact, it’s crucial.
Automobile adoption unsustainable
In other news, the United States and China consumed around 40 million light vehicles in 2015. By 2020, that number will probably rise to 100 million. “That’s not a lot of cars. That’s an ocean of cars,” said Market Watch Contributor Dan Neil.
Flying in the face of the automobile adoption rate, however, is the rate of automobile utilization. In the United States, utilization is a mere 5 percent. Most of the time, most cars sit parked: an astounding inefficiency.
As for the answer? Ride sharing is one possibility, but according to Neil, that’s just a fleeting first step. What’s really coming down the pike, he said, is the end of mainstream private car ownership altogether.
Neil predicted that within a generation, “automobiles will be endowed with what’s known as Level 4 autonomy – full self-driving artificial intelligence for cars – which will not so much change the game as burn down the casino.” In his future, individuals will be able to summon a car to their location, pay for the miles they use, then bid it farewell. If it comes to pass, this scenario would completely disrupt the way Americans use cars while keeping the role that cars play in society intact.
Do you know what it wouldn’t disrupt? The way smartphone telematics works. Individuals could carry their auto insurance policy with them and enjoy continuous coverage no matter when, where or which type of car they chose: private, connected or shared. And while the world Neil described is at least one or two generations away, smartphone telematics is here, now, delivering coverage with easy efficacy no matter what the driving arrangement, from traditional car-ownership to peer-to-peer ride-sharing.
Bottom line? With each new development that’s rocked automobile insurance in 2015, smartphone telematics has proven itself a viable option again and again. We expect 2016 to be no different. Weighing your insurance telematics options? Check out our previous blog on Smartphone v. Hybrid Telematics.
How often do typical consumers interact with their insurers? Until recently, the answer would have been once a year, maybe once every six months – unless of course they have to file a claim. Actually, 44 percent of insurance customers may go for more than 18 months with no contact at all. Traditionally, insurance just hasn’t been a communications-heavy industry. That’s about to change.
The blessing and curse of slow communications
On one hand, a low volume of customer communications is a blessing, consuming fewer business resources and demanding little focus. But when you consider what businesses gain from better customer communications, that lack of volume is clearly also a curse.
For one thing, frequent customer contact leads to superior customer satisfaction. It leads to improved customer retention as well.
“Healthy and positive interpersonal relationships generate trust and win the commitment of the customers towards your business,” said Entrepreneurial Insights. “They also help in reducing uncertainty in the minds of customers regarding your products/services. By consciously trying to create a bond with customers by fostering positive relationships, you can improve your customer retention rates.”
In short, insurers who aren’t communicating with customers in a frequent, meaningful way are missing an opportunity.
Constant connection: the way of the future
In every industry, the Internet of Things (IoT) is making C-level leaders reevaluate just about every aspect of their business, communications no less than any other. With new channels popping up left and right, insurers today have a whole new opportunity to reinvent customer engagement for the industry.
The IoT is already transforming how things work. Over the next decade, we can expect those changes to twine themselves into the fabric of society even more deeply: wearable devices. Home automation. Mobile everything. In insurance, the key word is telematics.
How insurance telematics can lead to new heights in communication
Traditionally, the relationship between customer and insurer was facilitated by brokers. But in an IoT world, customers are going direct. They want more frequent, more personal, more meaningful contact, and telematics can give them that.
“Usage-based insurance programs are a game changer in that respect, as they enable insurance companies to establish new direct communication channels towards customers and eventually gain ownership of customer relations,” said Sheetal Kumbhar at IoT Now.
What to make of this? Three things.
Communications strategies for the telematics-tuned insurer
- Transform insurance into a daily communications channel by delivering insurance telematics via smartphone
- Leverage mobile apps to establish communications that are higher-quality and more frequent, increasing customer satisfaction and retention
- Harness opportunities to up-sell and cross-sell by using aggregated data to target audience traits and identify key sales moments
In short, insurance telematics makes a higher communications volume possible by delivering a stream of valuable, relevant content to customers every time they drive. And because much of this communication can be automated, it remains cost-effective and highly efficient for the insurer.
“Several insurance companies offering usage based insurance reported frequency of more than 10 visits a month for the customers checking their online driving score,” Kumbhar said. That’s a big increase from once every 18 months – and it pays off. According to Kumbhar, Allianz reported a spike in cross-sell ratio stemming from higher customer engagement.
The shift to digital communication is ripe with opportunity. Will you leverage it? To learn how Driveway Software can help, download our Fact Sheet.