Telematics has changed car insurance, but by collating better data insurers can do so much more to improve relationships with their customers
Can car insurance ever be made interesting and rewarding for customers? Traditionally, it’s always been seen as a chore that comes around annually and requires minimum engagement.
However, a growing number of insurers are realising that to improve their appeal to potential customers in an increasingly competitive market, as well as proving they’re offering the best-priced premiums based on the most accurate knowledge of their customers’ behaviour, they also need to offer something extra to engage customers more effectively.
The key to pricing premiums so they’re both appealing to customers while, at the same time, making commercial sense is to collate data from the widest possible variety of sources, according to Aldo Monteforte, chief executive and co-founder of The Floow, one of the largest independent computer and data science organisations in the global telematics industry focused on individual mobility. The Floow’s clients include Direct Line, Europcar and Nissan.
“One of the reasons we founded the company was that we understood the best way to gather this data is to be device agnostic,” says Mr Monteforte. “So we now offer insurers the ability to use in-car devices, accessing the on-board diagnostic port or smartphones, or both. In other cases they might use devices already installed in the car and so we have a partnership with car manufacturers such as Nissan, for instance, to collect data from these ‘black boxes’.
“The challenge of adopting a device-neutral approach is the scores that are generated must remain very consistent and predictive. This task is the responsibility of our data science team, staffed by actuaries, mathematicians, physicists and computer scientists. We also use complex, but insightful, contextual information to enrich that data, such as road infrastructure and the average behaviour of other drivers in the vicinity.”
These services, with online rewards, are designed ultimately to condition the behaviour of users to encourage them to drive more safely
This wide range of data means insurance company clients of The Floow can ensure their predictions are more accurate than others, which are based on more limited data sets, often gained in isolation, without the benefit of contextual enrichment.
There is growing interest in this more comprehensive approach to creating accurate predictions, and to improving client engagement in the insurance and risk management process. Earlier this year, existing investor Direct Line Group, the UK’s leading personal motor and home insurer, as well as leading Chinese investment group Fosun, and United Electronics Co, invested a total of £13 million in exchange for a minority economic interest in The Floow.
“We also offer insurers white-label services for their policyholders, such as emergency assistance, as well as education and advice,” says Mr Monteforte. “These services, with online rewards, are designed ultimately to condition the behaviour of users to encourage them to drive more safely.”
Insurance companies need to look more widely when it comes to telematics, and to think about how they gather and use the data this technology offers, as well as what else they can present to their customers to increase their loyalty and engagement with the brand, he argues.
“With a traditional policy, most customers just think about renewing it once a year when they’re asked to and then forget about it,” Mr Monteforte says. “But we’re finding more insurers are coming to us because we can help them not just to offer a more accurate premium, but to give the customer better value too, by offering services that have not traditionally been associated with an insurance policy.”
This could be an Amazon voucher, cinema tickets or an offer for a meal at a Nando’s restaurant, for instance. “These really cool gifts can be tied to responsible behaviour to improve premiums and road safety,” says Mr Monteforte. “That’s good for the insurer, good for the customer and good for society as a whole.”
For more information please visit www.thefloow.com