Insurers urged to evolve service

Speakers at the fourth annual Motor Insurance Summit sounded a rallying call to the industry to use data and technology differently to satisfy changing customer habits and demands.

More than 100 motor insurance leaders met at the Waldorf Hilton Hotel in London yesterday, when they were encouraged to change their attitudes towards data to enable them to offer the sorts of services the customers of tomorrow (and, increasingly, today) will expect.

While data from connected cars and drivers will remain crucial in policy assessments, insurers were urged to use technology such as telematics to engage with customers more if they want to thrive in what some speakers believe is a shrinking market.

Global telematics director, RSA, Kenny Leitch, said, ‘We’re facing out into an industry that will shrink. It was worth £30bn in the UK in 2015, but what will it be worth in 2025, 2030? We need to harness new technology to put new propositions out to our customers. Clever use of technology will determine the winners. It always has, but even more so now.’

Andy Watson, chief executive officer at Ageas, shone a light on one of the problems by pointing out that in the UK today just 36% of the public trusts financial services. In the USA it’s more than 50%, while in India it’s over 70%. He suggested a contributing reason for this is the insurance industry is being left behind by the fast pace of technological change.

He said, ‘In insurance, we offer customers a product they don’t want, and talk to them in a way they don’t listen to.’

Andy pointed to the preference among Millennials to borrow rather than buy, a trend which is only increasing but isn’t properly catered for by insurers.

And, he warned, relying on a more traditional approach to baby-boomers (80%of whom own a car) is both myopic and misguided. Although they represent an older age bracket, they are far more open to new technology than many insurers presume and, increasingly, they too will demand a different approach.

Andy said, ‘The traditional views on how to market to this generation needs to change.’

One technology that could help insurers remain in touch with customers is telematics. Although it’s been around for 10 years or more, Nick Walker, managing director, telematics, at the RAC, believes it’s not being fully exploited.

He said that as long it is continues to be seen as a data gathering tool only, it will continue to miss the mark as far as customers are concerned. Emphasising his view that it’s being misused, he said that less than half telematics-based motor policies are still in place two years after the policy is taken out, while 20% are cancelled inside 12 months.

Nick urged insurers to use telematics more intelligently to engage with customers. He said, ‘We [the RAC] see telematics as much more than just driver-behaviour monitoring tool. For us, the focus is on services not data. That’s what the customer wants to hear. Services creates a broader audience, and enhanced touch points equals enhanced trust.’

He added that the RAC has invested heavily in a telematics device that is 92% accurate when it comes to FNOL, and has also introduced a new app which is all about engagement, offering the driver immediate access to a range of real-time and historical information relevant to them. It covers behaviour data, journeys, individual driving scores and vehicle health, while also proactively engaging with the driver with alerts about everything from MOT to traffic congestion.

Kenny agreed with the need for insurers to change their focus, arguing that developing technology is inevitably resulting in a reduction in collisions and injury; in the UK alone accidents were down 30% in the last 10 years despite a national increase in mileage.

He believes the main areas of change are, and will be: tech-enabled propositioning (telematics); tech-influenced insurance risks (sharing habits of consumers, autonomous driving); and tech-improved processes.