Discounts are becoming a key feature for insurers to be able to enter the U.S. market and Canada. This requires the combination of product features.
There is something that needs to be done for auto insurance policy holders in Canada and the United States. According to BI Research, UBI adoption in North America is increasing at a rapid pace. Market watchers are closely monitoring the growth of auto insurance as well as the potential challenges facing the auto insurance industry. Figures depict a rosy picture. The North American Telematics-based Auto Insurance Growth rose from 4.1% in 2015, to 6% in 2016. In 2019, the growth rate is expected to be 19.2%. How important is telematics expertise for expanding market reach? Are discounts a way to increase subscriber base? What is the downside? Let us explore.
Telematics is a cost-effective way for insurers to do business. However, convincing policy holders seems to be their greatest challenge. With the advancement of ICT knowledge, yesterday’s know-how is obsolete. Today’s wired world is a highly connected one. Customer engagement and data collection are key to success. Insurers with cutting-edge technologies such as: Geo analytics, driving data capture, direct marketing channel and Roadside assistance (NSD partner), Driving data capture and geo analytics can convince potential policy holders. For the telematics market, Gen Z and millennials are technophiles.
Discounts are for cost reduction and technical features are meant to mitigate risk. Combining both of these factors will make market penetration easier. An expert can now take a balanced approach. Donald Light, director of Celent, an international research and consulting company, believes that a mix of surcharges and discounts can bring about a bright future in telematics. He shared his views during the ‘Insurance Telematics Canada’ 2016 conference in Toronto. Surcharges are premiums for risky driving behaviors, as we all know. Light suggests this to alter the perception of drivers about their driving.
What perception does Light want to change? The perception of quality is what determines the price people pay for a product/service. This same principle applies to driving perceptions. Encourage them to use the telematics mobile app to get discounts if they believe that they are a better driver than they actually are. His self-esteem is a key factor in improving his driving habits and accepting his drive score as the ultimate criteria for driving improvement. Education is the only way to change perceptions.
UBI’s purpose is to reward drivers who behave well on certain criteria such as speed, acceleration, and phone use. A large portion of the population is mobile, so it makes sense to have telematics mobile apps on mobile devices. This will reduce accidents and earn drive scores to get premium discounts. To change drivers’ perceptions and understand standard driving behavior, UBI must be accepted as fair.
Cyber security education should be expanded as telematics apps can also be vulnerable to cyber attacks. This is important considering that 60% of trucks and cars will be connected to the internet by 2017. To gain greater market acceptance, tailored telematics services must address cyber security issues.
Telematics is an attractive option. It is also promising for insurance companies that want to expand their reach. Mobile telematics can be accepted by more people thanks to cutting-edge technical features. These issues can be addressed to make it easier for auto insurance market penetration.
