Why is buying auto insurance such a painful and tedious process? I have to navigate through static web page after static web page or answer the same series of banal personal questions on the telephone.
I’m losing interest and there’s no guarantee that the product or price at the end of the experience is going to be attractive enough to warrant the time I’ve invested.
In the 2011 U.S. Insurance Shopping Study, a total of 54 percent of shoppers turned to the internet first for a quote. According to the same study, over 50% of people now shop for insurance online. In today’s connected world, the whole process seems disingenuous.
Smartphones are ubiquitous, data around past driving history, claims, vehicles and repair costs are available but why aren’t insurers using it to make my experience quicker and simpler. I’m guessing they would if they could but the data is locked away in silos. How can these be combined to give a much more seamless experience to the consumer?
Several players have tried to do it, but none of the existing players have managed to combine insurance data, vehicle claims, accident history, driving patterns and rich external data from sensors and other devices to give a tailored insurance product that is transparent in the assumptions made to arrive at a price.
The opportunity is ripe for a new player to enter the market with a differentiated offering that is driven from a smartphone app and thereby gain a clear edge against the competition.
The biggest doubt that limits legacy thinkers is that even if an insurer were able to combine data from sensors, past history and telematics and serve it up through the engaging user interface provided by our smartphone screen, how do they ensure consistency of use? How do we make sure the phone is with the customer? How do we make sure we capture the data from every journey? The answer to those questions is that you don’t have to.
To gain an effective understanding of driving patterns and give insurance underwriters enough data for risk assessment and pricing only a small sample of data needs to be recorded.
Is there a risk that this will attract discount seekers or those that will aim to game the system? Yes, but not to any greater extent than it does already or for any other solution. In reality, the more the collected data, any data, the easier it becomes to detect fraud.
A convergence in technology is on the horizon. Telematics and M2M offer rich data about driving patterns and vehicle health, while data stores are already being integrated to provide a single view of a customer. Combine this with on-the-go-data provided by smartphone sensors, mobile tower triangulation and GPS data, as well as vehicle ownership and lien data from finance houses and what you have are all the inputs an insurance underwriter needs for a price quotation.
The challenge is to combine all this into a credible consumer offering with an engaging positioning and marketing message that promotes usage and drives engagement.
This is how insurance will be transacted in the future and at some point it will be these solutions that will migrate from our smartphone to the dashboard of our vehicle.
What insurance companies cannot afford is inactivity – they must look to the future, adapt and bring these propositions to market before competitors from outside the industry.
What do you think is the best way in which today’s technology can help insurance companies serve us better? I’m using my car less and other transportation more – I need a different type of insurance product – do you?