As promised in the previous article, here we will tell you what insurance companies have done to further strengthen telematics in our days.
The 3 implementations on the insurance companies
- Added structured behavior change mechanisms such as cash back earned on each trip to reward and encourage less risky behavior.
- Leveraged telematics data leveraged in claims processes to improve the customer experience and increase both the efficiency and effectiveness of claims handling.
- Introduced “try before you buy” applications, getting more accurate pricing on the first quote, in order to attract better risks in each pricing group and reduce premium leakage due to bad risks.
Additional use cases allow them to build more robust UBI business cases, creating value in insurance profits and losses. In the same vein, it makes it possible for them to create more attractive value propositions for customers:
The more value you create, the more you can share with policyholders in the form of discounts, rewards and cash back.
These incentives, in turn, attract new customers, driving further adoption.
Vision for the future
Forward-thinking insurers investing in these innovations today are progressively building the skill set needed to master the use of telematics data in the insurance business.
This will not only create faster-growing and more profitable UBI portfolios, but also proactively address the transition to future mobility.
Lack of maturity
However, much of the market has not reached this level of maturity. Underwriting remains the most common area in which insurers use telematics, although some are beginning to explore other areas.
The percentage of insurers implementing or testing telematics has remained virtually unchanged since 2018 (insurers already participating, many of which have measured positive ROI, continue to innovate).
Insurance companies whose internal technology environments are still mid-transformation may find it more difficult to support value-added telematics functions. For them, the value proposition of telematics as a whole is less clear.
In particular, insurers need substantial data capabilities to manage RBU data at scale and innovation capabilities to transform the way business has been done for decades.
And what can we predict for the future of telematics? In the third and final part of this series of articles we will tell you, along with an overall conclusion to this whole innovative and interesting topic.