Connected customer relationships for UBI insurers, explored by Graham Jarvis.

With all of the benefits that the data offers from automotive UBI and telematics it’s easy to rubs one’s hands together in glee about all of the insight that it can offer insurers.

In essence it should enable insurers to enjoy a better and more connected customer relationship with their customers but there is the danger that they could be losing sight of what their customers really accept in terms of the intrusion into customer privacy and what they actually want. This prompts Matthew Green, key account director at Consumer Intelligence, to say in his company blog’s headline: “Stop Selling Telematics Insurance. Start Enhancing Consumer's Lives.”

He adds: “Monitor, score and reward is the message almost every insurer is shoving in the face of consumers today. When I recently asked my wife what she thought about telematics insurance, she answered ‘I wouldn’t have it. I was done with being graded when I left university’.” To be honest many people will share her viewpoint because of the suspicion that UBI will be used more against customers than for their benefit. In other words if the industry falls into the trap of focusing solely on the benefits of what UBI delivers to insurers, then their customer relationships may become more disjointed rather than connected – no matter what telematics system is deployed.

The advantages

Looking more positively at the whole picture Randy Carroll, former CEO of the Insurance Brokers Association of Ontario (IBAO), comments: “There are so many advantages to having robust connectivity and the more consumers understand what is available the more it will assist in modern vehicle sales.” One could also extend this to UBI sales and any resistance to it will probably wane as customers become more and more familiar with other connected automotive services – not forgetting the fact that most people with a smartphone are already being tracked.

Consumer awareness

“Consumer awareness is key to the success of the connected car and the offerings that are available, and there are so many offerings that could be promoted, but the challenge will be for those responsible for marketing to manage their campaigns accordingly,” he adds. Beyond privacy the challenge is for insurers to simplify the lives of their customers by using data smartly and that means that it has be utilised in a way that it enables the development of a real customer-insurer relationship where customers don’t feel that they are being scored and negatively judged all the time – even if they are. Transparency is important about how insurers intends to use customer data but quite a number of us don’t like the feeling that we’re being judged all of the time.

People prefer to receive more carrots than they do sticks, like increased insurance premiums, and so the benefits of being a good driver should be far more than the risks of being scored badly. Therefore, the scoring needs to encourage driver development and offer rewards that connect with each driver. This is one of the reasons why connectivity needs to be put front and centre of the marketing campaigns for modern connected cars and UBI.

Building competitiveness

Anupam Malhotra, senior manager of connected vehicles and infotainment at Audi USA adds that this approach is a:

·       A key differentiator and a competitive advantage, especially when unique and innovative services are offered through connectivity.

·       A significant factor increasing the number of customer interactions with the brand past the initial sale. Each time a connected feature or service is used, a moment is created that enhances the customer’s experience over the vehicle ownership cycle.

·       A unique image builder for a progressive brand. Since connectivity and services based on connectivity are considered high-tech and typically originate from start-up, Silicon Valley-type companies, a brand’s ability to bring similar services into the vehicle greatly enhances a customer’s perception of the progressive thinking within the company which ultimately affects vehicle purchase decisions and loyalty

·       A foundation strategy to maintain the leadership and relevance of an automotive [or insurance] brand in a fast-digitalising future.

Optimising products and services

So how should car manufacturers and insurance companies use real-world data to optimise product development, from services to design, by tapping directly into consumer habits? Malhotra explains that there is a fundamental rule, that being that personal data can only be collected with the customers’ permission. “So there need to be proper privacy mechanisms in place because customers are more likely to provide their approval if they get a clear benefit from such data collection,” he says.

“An example of this would be UBI where driving behaviour data from the vehicle such as mileage and locations travelled can result in a lower risk profile resulting in discounted insurance premiums,” he elaborates. He rightly says that the data can also be used to deliver relevant location-based services, information, in-vehicle entertainment and offers. However, he believes that customers should have the ability to limit or prevent data collection if they so choose.

He adds: “An example of a product improvement benefit would be where data collectors in the vehicle provide aggregated information on what features, buttons, functions are used and how often or in what type of situations.” Service could also be improved using broadcast, streamed or device-based data to enable car manufacturers and insurers to better understand customer preferences. This could, even from a UBI perspective, lead to changings in system and interface design, and it could also influence the type of content that is offered to each customer based on their specific profiles.

Promoting safety

“Providing customers with enhanced safety features and broader efficiencies will create stickiness”, claims Carroll. He concludes that carmakers and their partners, including insurers, can create loyalty or stickiness that enables in-vehicle infotainment, maintenance and third-party added value to optimise the ownership experience of a vehicle in a way that creates brand loyalty. “A combination of in-vehicle alerts and mobile integration is key to creating a suite that will work for consumers: infotainment, maintenance alerts and third party value-adds need to be available both in car and in the consumers mobile space.” To achieve this they have to make the right approach to each customer. 

Connected Car Insurance Europe 2017

19 Apr 2017 - 20 Apr 2017, LONDON, UK

This is the largest and most comprehensive forum in Europe dedicated to connected car insurance. With over 400 attendees from across 25+ countries globally and 50+ executives speakers, this event will address the technological challenges and new business models to impact the motor insurance industry as it converges with the connected car.