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Smartphones will change the story
Smartphones are impacting the Usage-based Insurance proposition from different angles but one of the real gains will be seen on the sales and marketing sides.
One of the most difficult challenge today and in the future is to ensure the drivers accept a device in its vehicle or agree to download and then use an app that monitors its activities
The initial value proposition – the story – is the only motivation for the drivers to do that. It is therefore instrumental in defining
- how many drivers will choose the telematics offer,
- how they will feel about it during the first period and also
- how they will behave at renewal.
Some TSPs such as Amodo have been particularly useful at identifying how many drivers were engaged in the apps and the consequence this had on safety. At the same time, insurers such as Triglav or AIG have continuously tested engagement models improving and tailoring their story.
Apps are a unique on-boarding tool and should be seen from two angles:
- The Try Before You Buy model which is well known and used successfully by insurers such as AVIVA or Allstate as well as through safety programmes in cities such as Boston or CapeTown.
- The less well-known model is to embed insurance as the extra feature in an existing service. This can be done with a navigation or a speed-trap detector app. In Poland, YU! is a UBI programme launched by insurer Ergo Hestia in partnership with Yanosik, a popular speed trap mobile application. The driver needs to build a safe profile using the app before YU! offers a quote.
Today, our Mobile Insurance Global Study found that 75% of the UBI apps on the market today do not use ANY form of engagement. The capabilities are there, the case for engagement has been made but many insurers are un-interested or un-willing to change their old ways.
Mobile apps in insurance are growing extremely fast. A quarter of the active UBI policies worldwide are now based on apps. These should not be seen as a way to simply extract even more data from the driver but as an opportunity to create a more enticing story, followed by a clear benefit.
If insurance apps are the last one a driver installs because they did not fulfil the promise or did not work as expected, the future of smartphone-based data gathering will be jeopardised.
To learn from global best practices in Mobile UBI, download the Mobile Insurance Global Study