Insurers are recognizing the importance of discounts to penetrate
U.S. and Canadian markets. But this calls for the combination of
product features.
Something seriously required in favor of the
auto insurance policy holders in United States of America and Canada.
UBI adoption is growing at a frenetic pace in North America according to
the figures released by BI Research. Market watchers are keenly
observing the growth of auto insurance and the factors that can pose
challenges to auto insurance industry. Figures depict a rosy picture.
Telematics based auto insurance growth rose from 4.1% in 2015 to 6% in
2016 in North America. The growth is pegged at 19.2% in 2019. What is
the role of telematics expertise in expanding market reach? Can
discounts increase the subscriber base? Is there any pitfall? Let us
explore.
Insurers are constantly on the lookout for cost effective
ways of doing business with telematics. But convincing policy holders
seem to be their challenge. Yesterday's know how is passe with newer and
sophisticated knowledge developing on ICT front. Data collection and
customer engagement hold the key for success in the wired world today.
Aspiring policy holders can be convinced by the insurers with cutting
edge technologies like: Driving data capture, direct marketing channel,
Roadside assistance (NSD Partner), Geo analytics and gamification to
mention a few. The millennial and Gen Z are technophile demography for
the telematics market.
Technical features are for risk mitigation
and discounts are for cost reduction. If both factors are combined
market penetration is easier. At this point an expert is taking a
balanced view. Donald Light the director of Celent, a research and
consulting firm, is of the opinion that a combination of both discounts
and surcharges can provide a bright future for telematics in Canada. He
was sharing his view during 'Insurance Telematics Canada 2016' in
Toronto. We all know surcharges are additional premiums against risky
driving behavior. And Light suggest this to change the driver perception
on their driving.
What perception Light wants to change? People
pay a price for a product or service on their perception on quality. The
same theory is applicable to one's perception towards driving. If one
thinks he is a 'better driver' and not an average driver which he
actually is, then encouraging them to implement telematics mobile app to
avail discounts will become a demanding task. Because his self esteem
comes in the way of enhancing his driving behavior and accepting drive
score as ultimate criteria for improving his driving. It is at this very
stage only education is needed to change perceptions.
The very
purpose of UBI is to reward the well behaving drivers on criteria like
speed, acceleration, phone use etc. Vast part of the population are
mobile and it makes sense for them to implement telematics mobile app on
their mobile devices to mitigate accidents as well as earning drive
score to avail policy premium discounts. Education is needed to change
wrong perceptions of drivers to accept UBI as fair and to understand
what standard driving behavior is.
Education should be extended on
ensuring cyber security as telematics mobile apps are also prone to
cyber attacks. This should be seen in the context where 60% of cars and
trucks are going to be connected on net by 2017. This means tailored
telematics services should address cyber security issue also to gain
more acceptance in the market.
Switching to telematics is a good
option; it is also promising for the insurance sector that wants to
expand its reach. Cutting edge technical features, discounts for drive
scorecards as well as surcharges for errant driving behavior can
increase the acceptability of mobile telematics thereby attracting new
mobile subscribers. If these issues are addressed, auto insurance market
penetration will become easy.
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