Most of the digital transformation challenges facing insurers today are driven by data never available before. Carriers face questions like how to select the best data source, how much data to collect, where to store it, how best to use it, and how to get additional insights from it. As a result, many insurers are paralyzed by uncertainty and indecision.
This is especially true for usage-based insurance data because there is a multitude of data sources, including connected car, OBD hardware, mobile devices, apps, and more. And you thought deciding on a dinner spot was tough!
Despite these challenges, insurers need to up their UBI data game to stay competitive. SMA Research reports that approximately 70% of carriers are expected to use telematics-powered UBI by 2020. And policyholders say they’re more willing to share their driving data than ever before.
UBI has no place to go up but up and insurers who don’t get on board will be left behind. To make sure this doesn’t happen, here are four strategies to help cure UBI data paralysis.
Insurers need to find the best source for their UBI data. Hardware like OBD II and black boxes can be expensive, don’t track distracted driving, and are unpopular among drivers. Connected car data is valuable, but won’t be available at scale for some time. Smartphones capture nearly all the same data as the connected car, but also collect distraction data, and provide a new communications channel to customers. Plus, 85% of drivers own one and distribution is cost-efficient.
Partnerships with telematics companies and automakers can help insurers collect and process customer data. They can also help uncover new opportunities to increase UBI adoption.
Mobile telematics has already reduced the barriers to entry for UBI by cutting costs and increasing customer adoption, making it easier for insurers to use driving data to power personalized pricing and loyalty programs. This personalized approach increases customer lifetime value and loyalty across the board. To create these personalized digital programs, UBI data needs to be integrated into core underwriting, policy administration, and claims systems.
Make the data work beyond its basic requirements. Multi-purpose use cases, including data analytics dashboards that enable insurers to track, manage, and predict future losses, can provide enormous value. Insurers can find additional value in sharing data with underwriters to track demographic trends and generating leads for cross-pollination coverage like homeowners, life insurance, etc.
UBI data shouldn’t be scary. Instead, it should be a welcome challenge to grow the business and improve customer experiences across the board.
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August 5, 2019