The role of online aggregators in the growth of usage based insurance policies explored by Andrew Williams.

The way people shop for insurance is changing at a radical pace with online aggregators now firmly fixed as the new standard, enabling consumers to enjoy a broker-like experience with maximum convenience.  So, what are the key advantages and disadvantages of using online platforms and aggregators to provide UBI products?  Can digital methods, like retargeting advertisements, or aggregator partnerships help to improve the visibility of UBI products?  And how can telematics technologies help in the creation of innovative, flexible and tailored episodic coverage for 'connected consumers' in the sharing economy?

Easy opportunities

In view of the fact that many online consumers are motivated by the cost of their premium, Andrew Lee, head of market intelligence and analysis at Octo Telematics, believes the key advantage of aggregators for UBI providers lies in their ability to demonstrate to consumers how much money they could save by purchasing UBI products compared to traditional insurance products. “Online platforms that attract the relevant captive audience also present easy opportunities to market complimentary platforms that are enabled by telematics, for example gamification, where drivers can compare their performance against friends and family,” he says.

However, because aggregator comparisons only tend to be conducted at a 'high level' with output fields generally limited to variables such as no claims protection, legal cover and excess amount, Lee also argues they do not furnish UBI providers with the capacity to communicate the key benefits of using their products, such as faster processing of claims and other value added services like stolen vehicle recovery and emergency and breakdown call services. “If these were part of the comparison the consumer would have more elements to make a decision,” he says.

Improving visibility

Elsewhere, Robin Harbage, director at Willis Towers Watson, believes the ease-of-use an aggregator can create for transmitting consumer data to the properly matched insurer will, one day, tremendously improve the adoption of UBI but only when the system becomes “nearly frictionless” for both the consumer and the insurer. “The downside to working with an aggregator is finding they don't have a well established process and cannot reliably connect consumer telematics data to the insurers in an easily consumed manner,” he says.

Lee agrees that the new breed of digital methods like advertisement retargeting and aggregator partnerships can play an important role in helping companies to improve the visibility of their UBI products, as well as in communicating the broader benefits of adopting telematics technology.  In turn, he also believes that such benefits help to promote a general increase in the adoption of UBI, especially beyond young drivers and early adopters.

That said, he still warns that those consumers using aggregators that do not correctly feature UBI may simply think that they have secured the cheapest quote possible, unaware that “with UBI they can potentially make further savings as well as receive benefits from additional services”. “This is most important for drivers that still see telematics in a negative way: tracking what they do and penalising the odd occasion they might speed and so on.  In reality, if they can prove they are generally a good driver, they can only stand to save money as well as benefit from 'guardian angel' type services,” he says.

Role of telematics

Owing to the sheer magnitude of the typical automotive insurance premium, Harbage contends that UBI products are now beginning to function as the “economic engines” for driving telematics to consumers who, he believes, will then be able to use “multiple products around vehicle maintenance, safety and convenience”. “Collaboration and partnerships between insurers, data aggregators and data suppliers can efficiently and effectively provide a suite of services to consumers,” he says.

Looking ahead over the next few years, Lee also predicts that telematics technologies will prove to be a fundamental element in the creation of innovative, flexible and tailored episodic coverage, particularly of the type increasingly expected by technologically aware connected consumers in the sharing economy.

In particular, he points out that many market disruptors in the mobility and insurance technology (Insurtech) sectors already rely on this technology and, as society continues to become more and more connected across a variety of platforms and environments, he argues there will be “more opportunities for innovation, flexibility and tailored products and services”. “For example, we have already seen on-demand insurance.  As this concept matures, telematics will help reduce fraud and govern the risk profile of the consumer and the protection they seek,” he says.

“Such products, while initiated through insurance, can very quickly become a lifestyle product, not only repairing and replacing products when a claim takes place, but also recommending 'better' products based on the profile of the consumer," he adds.

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