Charles Smith, vice-president of product at driving risk management firm SambaSafety, outlines the components that should underpin a comprehensive telematics offering
Traditional motor cover models often fall short in accurately assessing risk, leading to inefficiencies in pricing and risk management efforts.
Telematics, however, offers a transformative opportunity to reduce the visibility gap, using a rich dataset with high veracity to deliver differentiated propositions with enhanced risk management capabilities that can improve loss ratios.
By utilising this data, insurers can make data-based decisions about the actual risk of an insured at quote, while on cover or at renewal.
Developing a telematics programme may seem challenging, but with a clear strategy, the process becomes more manageable.
Drawing on discussions with many of SambaSafety’s 4,000 insurance clients, I have observed six characteristics that successful telematics insurance programmes globally share.
1) Clear incentives
Many insureds are sensitive to sharing their telematics data. Successful programmes offer clear incentives and go beyond offering an upfront discount by clearly articulating what the carrier will do with the data to help the customer understand and reduce their risk.
2) Clear outcomes
To maximise trust and transparency, the best programmes provide clear guidance on the rebate discount the insured can expect on their renewal rate if the insured hits pre-agreed risk metrics.
3) Low friction credential acquisition
The process for an insured to generate and share the right telematics credentials is often unfamiliar territory and every telematics system has a different set of steps.
If done well, this process can be a great first onboarding experience. However, if there is friction or manual processes, it can destroy momentum.
4) Clarity on data acquisition strategy
Insurers that have established clear data retention plans from the beginning fare better than their peers in the long term.
This data will quickly become an invaluable asset – however, just 1,000 vehicles can produce over 4.2 million data points per week, so holding all this data can become impractical.
Most sustainable, long-term programmes will have clear goals for what they wish to learn and a strategy for how to aggregate data in such a way that retains key insights.
5) Regular, scalable customer touchpoints
Programmes that consistently reinforce value during the policy lifecycle with meaningful risk insights have higher engagement.
6) Ability to support advanced customers
Some insureds will want to engage with data and insights more than others.
Having resources to engage and support those who want to learn from the data and build sophisticated risk management strategies is a differentiator and creates opportunities for additional revenue streams.
This can include risk consulting services, e-learning and access to self-serve risk management software.
The future of insurance hinges on how well carriers adapt to new technology. The good news is that insurers don’t have to figure it out alone.
Propositions like the ones we’ve built at SambaSafety support insurers through this complex field.
