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UBI can optimize customer engagement, not just reach

Is usage-based insurance all about competitive pricing and premium discounts? We don’t think so. When looking at what policyholders want in a UBI auto policy, it’s clear that they also expect the insurer to be there when servicing a claim, explaining an endorsement, and helping them with their policy.

In fact, a recent study conducted by LexisNexis Risk Solutions found that 76% of respondents were as interested in receiving free roadside assistance as they were in getting a 10% discount on their policy. Eighty-six percent said they’d prefer a $200 discount on their deductible over a 10% discount. Sixty-three percent said they were tired of insurers promising they could save money with UBI. And over half didn’t believe the discounts would make a dent.

Yikes… The bottom line: Attracting and retaining UBI customers is not just about price.

But it’s still difficult for many insurers to look at UBI as a way to improve customer engagement and drive business. Most insurers developing UBI programs focus on pricing precision – creating policies that are specific to the policyholder, which enables them to offer a discounted rate. And while getting the pricing right the first time is critical to effective risk management, insurers also need to understand that UBI opens doors to personalization never available before in the insurance industry.

“In marketing UBI as a means of obtaining premium discounts, carriers have all been chasing the same price-sensitive customer,” say the authors of the LexisNexis Risk Solutions usage-based insurance research report. “By offering other incentives, carriers may be able to target other, less price-sensitive customer segments, especially given that consumers may have other motivations for adopting UBI. The key is for carriers to align and promote the benefits of UBI with the needs and wants of the customers they are best able to serve.”

Insurers who offer UBI through a mobile device are ideally positioned to deliver on this promise of a personalized experience. The mobile app that collects driver data for UBI is also a new communications channel insurers can use to strengthen relationships with their customers. They can send push notifications to encourage them to drive safer, alert them to dangerous driving conditions, and introduce them to new opportunities or products.

Within the app itself, they can streamline the claims process, answer FAQs with a bot, offer emergency roadside assistance, and more. Each of these experiences creates an additional touchpoint for the insurer, and each creates an opportunity to build relationships that increase customer loyalty.

A UBI strategy of adding services with the goal of increasing customer engagement might not immediately increase revenues, but it will deliver value by earning greater loyalty and lifetime value of customers. After all, it’s better to retain and deepen relationships with existing customers than trying to find new ones looking for discounted premiums.

Categories: Blog,Telematics,Usage Based Insurance