The auto insurance industry is undergoing a significant transformation, largely due to consumer driving behavior and preferences tied to mobile technologies.
We see this in the wide range of connected car services now available thanks to mobile technologies. And we see it in the way drivers want carriers to communicate with them – namely a channel that’s relevant and real-time, which is increasingly a mobile device. We also see it in the way insurers use mobile data to create customer loyalty and a better auto insurance experience for the driver. But insurers have yet to take advantage of the smartphone’s true power.
When Bain & Company asked consumers which they would miss more for a day – their physical wallets or mobile phones – more than half chose their phones. In China, it reached 79%!
It’s widely accepted that smartphones have become an integral part of the auto insurance ecosystem. But telematics and smartphone apps help improve the overall automotive ecosystem as well – from the car manufacturers, to the parts OEMs, insurers, the highway transportation systems, and even the public entities that service the roads.
From an insurance point of view, mobile technologies represent one of the greatest opportunities to reduce the frequency and severity of auto claims, improve loss ratios, and increase communication and engagement with the customer.
Two general reasons. First, every insurer should consider mobile apps that help their customers become better, safer drivers. At a minimum, insurers who offer telematics programs like pricing/UBI and engagement get driving and vehicle data that rate drivers for safe driving and then reward them with premium discounts. These telematics-based products offer many benefits – from financial, to environmental, to societal.
From a risk management perspective, carriers can use the latest technologies to get more data than speed, braking, and information about road conditions. The latest mobile tech can reveal if the driver is holding her phone while driving, talking or texting (i.e., distracted), where the smartphone sits in the car, if it’s charged, and more. This information is golden to the underwriter who is trying to accurately predict and monetize risk.
Second, the smartphone can be used as a “touch” channel to improve customer contact and loyalty. While mobile technologies don’t necessarily replace other channels for customer engagement, they certainly complement them. As Bain notes, digital platforms promise personalization and raise the level of interactions, delivering more value to customers. Insurers seem to understand this, as their customers continue to go digital.
The higher the level of interaction with the customer, the more likely the insurer will generate long-term loyalty. From each interaction, insurers can collect more data and better understand their customers’ interests, behaviors, and potential future needs. What’s more, the latest research shows that people are more willing to share their personal ﬁnancial and health data with insurers, which means they’re open to a deeper relationship – and carriers can learn even more in the process.
Auto insurers who apply mobile tech to their ecosystem are on the right track, and will be first to the table to dramatically improve their auto insurance programs and their ability to delight customers.