Negative Impact of the “Me Too” Strategy on UBI and Best-in-Class Functionality for Your Backend Management System
by Curt Davies, Director, U.S. Business Development and Strategic Alliances at IMS
Last week, I attended an outstanding industry conference. It really was one of the best-produced conferences I have attended since I started presenting at conferences (too) many years ago. The keynote speakers were all insightful celebrities and the swag was better than what Santa has delivered to my house for the past two Christmases. Oh yeah, and the presentations weren’t bad either.
During some of the breakout sessions, I overheard some conference attendees discussing their overarching strategy for Usage Based Insurance (UBI). I heard a couple of the usual comments “We’re waiting for all cars to have embedded connected car technology”, and “We’re looking for a smartphone solution”.
However, I did hear a new comment that a couple attendees admitted their companies have employed: the “Me Too” strategy. I was a little caught off guard when I heard it. Not an ideal strategy for deploying
For those not familiar with the “Me Too” strategy, simply put, company X creates or replicates its own version of a product that already exists in the market. This is done to keep up with competitors. So, when it is mentioned that competitor Y has this product company X can say “Me too!”
This strategy might be more effective when selling hammers. Obviously, UBI is much more dynamic and should be part of a much larger strategy of improving risk management, pricing accuracy, and policyholder intelligence. The data and analytics created from gathering valuable driving data
Let’s get back to the harmful impact of the “Me Too” strategy on UBI. Typically, products launched under this strategy are not properly funded beyond product launch; as the program goal and the launching of the product are one in the same. Any long term goals do not include improvements to the product and any real value of the product is rarely realized.
The immediate negative impact of employing a “Me Too” strategy is seen in the lack of resources to properly distribute, manage, and improve the product. It also relieves anyone of responsibility for the product (or program) thus no one is required to show positive results or improvement.
In the long-term, policyholders must endure the brunt of the “Me Too” strategy. Their experience with an insufficient UBI product is poor at best. Participation in the program steadily decreases or stagnates. Either way, participant numbers never come close to those listed in the business case. Moreover, the product and program are disparaged in the market and, the company and ecosystem all receive negative marks from policyholders.
There are certainly better strategies that offer greater returns in the short and long-term. I encourage those considering
Here is a bit of information that will be helpful when comparing backend management systems- look for the following:
- Responsive dashboards that provide visibility into key performance metrics so you can make informed decisions about your program.
- Data visualizations and program analytics embedded within the product to help you understand month-over-month program growth and analyze impacts of marketing campaigns, seasonal effects and geographical adoption.
- Program diagnostics that provide you with detailed business intelligence to manage program health and identify areas for follow-up, such as potentially fraudulent behaviors.
- Flexible reports support online viewing, scheduling and exporting to fit within your best practices and business needs.
- Flexible enrollment capabilities that support all stages of program growth with enrollment interfaces that support single to bulk enrollments, all backed by fully automated enrollment integration.
- Integrated device tracking tools provide full insights into shipping and the cadence of devices reaching your customers.
- Comprehensive logistics tracking that is available throughout the account lifecycle – from enrollment, shipping, delivery, installation and ongoing data reporting for each user.
We recommend that anyone interested in building a business case for usage-based insurance contact an experienced, knowledgeable telematics service provider (TSP). They can help you carefully evaluate and understanding the business case scenarios most appropriate for an insurer. The right TSP can also help identify the business case best suited to each individual business’s strategy— the necessary foundation for implementing a successful program.