5 Significant Telematics Insurance Questions Every Insurer Should Ask
1 – How Will the Telematics Insurance Market be Impacted by the Connected Car Ecosystem?
Today the open-standard, connected car ecosystem that is coalescing around telematics insurance, which has also been referred to as usage based insurance (UBI) brings together a diverse group of participants, attracting businesses in the automotive sector (original equipment manufacturers, dealers, service providers), software platforms, device manufacturers, software developers, system integrators, content providers, and more. The entire automotive industry is poised for a wave of innovation, as next-generation telematics insurance becomes the first mass market to connect cars.
2 – What are the Predominant Themes in Telematics Insurance’s Future?
Beyond the initial objectives of telematics insurance—primarily attracting low-risk drivers and creating the best book of business—are new value propositions and emerging opportunities based on evolving capabilities. With telematics evolving and improving, the focus is shifting toward:
- Creating rewarding value propositions for policyholders to both attract and retain them as long-term customers.
- Exploiting the intelligence in telematics data to streamline and enhance claims processing.
- Taking advantage of available vehicle information to provide extended services and greater value for drivers.
These value propositions can provide benefits that ripple through the entirety of the insurer’s value chain.
3 – Mobile Telematics Systems Keeps Insurers Ahead of the Competition
The data-centric features of telematics insurance and the intelligence-rich data provided by the supporting technologies suggest several areas of near-term opportunities for future growth, including:
- Integration with claims management and policyholder managements systems: Improved integration with existing systems strengthens the overall benefits achievable with telematics insurance as workflow and processes become more streamlined.
- First notice of loss (FNOL): Faster, more accurate claims processing can be based on early detection and notification of incidents.
- Roadside assistance and other value-added safety services: Optional, extended services to policyholders can be based on built-in telematics communication and incident alerts.
- Vehicle maintenance and health: Customers appreciate tips and guidance to help keep their vehicles in top operating condition, improving customer retention.
- Accident reconstruction: Rich data can enhance accident reconstruction and lead to more precise claims processing, better customer service, and informed fraud detection.
- Program analytics: Access to tools that extract actionable intelligence and reports from telematics data to assess program health is becoming easier as program analytics become more sophisticated.
- Commercial lines applications: Moving from individual policyholders to fleet coverage can be a natural extension of a successful insurance telematics program.
4 – Should Mobile Telematics be Considered as a Key Part of an Insurer’s Core Business Strategy?
Mobile telematics insurance based on current-generation smartphones offers a means for customer engagement, as well as a cost-effective alternative to other forms of telematics data collection. An experienced TSP can help evaluate the pros and cons of mobile telematics. In a number of scenarios, mobile solutions can serve as the basis for an entry-level alternative to other telematics device options or as a useful two-way mechanism for establishing ongoing direct communication with customers.
Mobile telematics is a technology that is moving unusually fast, making it particularly important to align with an experienced partner to help you decide if the benefits of this technology suit your program goals, objectives and segmentation strategies. The ideal mobile telematics insurance partner will not push you toward a single device, but instead support you with information, alternatives, and processes so you can build a program around your book of business that fulfills your corporate mission.
5 – Does Mobile Telematics Improve the Value Proposition for Insurers and Consumers?
Mobile applications represent a unique value proposition to insurers because of the opportunities to open dialogs with customers on smartphones and provide immediate feedback on driving behaviors and everyday practices. Mobile apps can also be paired with OBD devices in hybrid solutions that provide the best of each technology. Insurers can strengthen engagement with gamification in a number of ways, such as offering badges and incentives for safe driving to positively influence driving behavior and appeal to younger drivers with what feels like a natural extension of their daily computer/smartphone interactions. Options and possibilities in this area are diverse, suggesting the need for guidance to navigate the mobile telematics landscape.
The leading data collection options for telematics insurance are discussed in “Comparing Mobile, OBD, and Hybrid:Data Collection Options White Paper”.
The Growth opportunities in telematics insurance are numerous, we recommend that anyone interested in capitalizing on the opportunities of telematics insurance or building a business case for telematics 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.