How do insurers develop and launch a telematics offering

October 2, 2014 SSP Limited

It is estimated that there are around 7 million drivers using telematics products. Research indicates that by 2017 the global telematics market will be some 89 million drivers – 15% of the total driving population.

With a high level of accidents pushing personal injury claims, products and services that improve efficiency are attractive propositions, which builds market demand for usage based insurance products such as telematics. Evidence also indicates that telematics products deliver 20-30% cost savings in claims alone as both the frequency and the severity of claims are reduced. This reduction is a direct impact of the usage of innovative claims indicators able to proactively manage claims, reduce fraud risks and avoid fatal deaths.

Initially the main driver in markets adopting telematics products was self-selection as better drivers were early adopters, allowing Insurers to identify and retain more attractive drivers. As markets matured the impact of reduced claims incidence and severity became increasingly stronger drivers.

A further adoption driver is the move towards more innovative, value-add products and services as part of Insurers’ digital strategies. As Insurers look to adopt innovative technologies to develop products and reach out to people through new channels, telematics forms a key component to realise their digital strategy.

Telematics forms a new route for additional real-time data enrichment, from driver behavioural data through geo-spacial/locational data to social media activity. It is therefore a fundamental element of the innovative digital trends, particularly when offered through smartphones given their level of adoption and usage by individuals.

SSP identified 8 areas for insurers and brokers to consider when developing and implementing a telematics solution.

  1. Segmentation - targeting specific segments and moving towards the mass market opportunity. A move away from self-selection to behavioural segmentation e.g. competition interest, mobile technology interest. Developing a target offering at these segments will enable insurers to secure a better cross-section of customers.
  2. Value-added services offered through mobile delivery platform e.g. policy admin, claim registration, debt collection and management, location offers such as cheap petrol or parking, coffee offers, pushed information services such as warning of hailstorm in a localised area.
  3. Digital interaction – creation of dashboards. The need to drive people to visit your web or mobile site to increase customer engagement. Gamification/competitive angle/prizes to make more interesting. Logical integration of social media around these events. Using these approaches to change perceptions away from “boring” insurance.
  4. The need to combine data. For example, driver score integration into the rating algorithm for the existing motor product offering. Regular delivery of the driver score in electronic format and in an efficient manner. Insurer driven mid-term adjustments, including a supporting administrative platform that enables mid-term adjustments. Minimised changes by integration into existing processes.
  5. Reward good driving behaviour, for example with renewal discount or discount offers/vouchers.
  6. Data enrichment and data analytics, integrating disparate information sources e.g. pricing and rating, customer behaviour analysis, claims analysis and reduction. Claims data enrichment including for example the creation of a digital data picture of an accident/claim event. Consideration of strategies for holding the data – the organisation can hold themselves or SSP has the capability to host the data on the company’s behalf.
  7. Embedding telematics into existing business processes and educating the consumer. This includes the development of KPIs to achieve targets such as minimised call duration times.
  8. The final consideration is the development and implementation of an overall proposition: developing a digital strategy and as part of that framework a telematics proposition. Within this decisions around device selection, customer servicing, data capture and feedback, data hosting and data enrichment/integration from multiple sources.

Data enrichment, multi-channel distribution and seamless integration of new and social media are fundamental enablers of a successful digital strategy, and telematics is a value-add example of these that has resonance among consumers. Using the big data revolution to deliver and service an innovative customer proposition.

About the Author

SSP Limited

As the leading global supplier of technology systems and software for the insurance industry, our role is to help insurers and brokers operate more efficient businesses. So whether you’re a global insurer or an MGA, a high street broker or a start-up with a smart new idea, we can be trusted to support you on your journey, whatever the destination.

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