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Financial services giant enters the short-term fray

01 June 2011 FAnews

Discovery Insure enters the short-term insurance fray at a time when technology makes it possible to apply driver behaviour to the motor vehicle risk premium calculation - and that means they can offer cheaper insurance to ‘better’ drivers.

In addition to its medical, life insurance and investment products, Discovery now also offers personal lines insurance. It becomes one of the first major new entrants during the so-called telematics age.

Into the age of telematics

Telematics devices – tracking devices on steroids – provide vehicle usage data which can be used to build intricate driver profiles. While competitors struggle to reverse-engineer vehicle telematics into their existing products, Discovery has built the technology into its product from day one. And while other insurers wonder how to retain their clients, Discovery has fine-tuned its Vitality concept for the short-term world. “We are very excited to enter the short-term insurance space,” says Discovery chief executive, Adrian Gore. “We studied the market for some time and believe we can bring about structural change.”

Differentiating factor

Discovery Insure offers fully comprehensive motor vehicle insurance, household contents cover and homeowners insurance. The differentiating factor is the incentive-based driver programme called Vitality Drive™, which will encourage and promote safe driving. “Our approach with Discovery Insure is built around traditional insurance models, but also rewards consumers for driving better,” says Discovery Insure chief executive, Steffen Geffen. “In doing so we are confident that we can get consumers to drive better, have lower claims and pass this benefit onto consumers in the form of rewards.” This includes up to 40% discount on BP fuel spend, and existing DiscoveryCard and Vitality members can ‘earn’ additional rewards.

VitalityDrive is similar to the Vitality incentive currently linked to the group’s life and healthcare businesses, with one exception. Instead of qualifying for incentives based on Vitality health status, your client will have to accumulate Driver Quotient ™ (DQ) Points to climb the Vitality Drive ™ status ladder. The better the status, the greater the benefit your client receives. DQ Points can be earned in one of three ways – by taking the vehicle for a multi-point ‘safety’ check, by completing a series of driver safety questions online, and by driving well.

Scientific approach

A DQ Track ™ telematics device measures your client’s driving style. The system tracks vehicle position and provides real time feedback on, for example, speed, acceleration, braking and cornering forces. Discovery Insure secured the services of automotive engineer Rory Byrne to apply his expertise in motor vehicle dynamics to the methodology behind the Driver Quotient ™. And the formula to determine ‘safe’ driving is based on more than 100 000 hours of actual data!

Serious contender

Existing insurers who dismiss Discovery Insure as a cocky newcomer are making a serious mistake. The company has massive reach through its existing operations and unless other insurers improve their product offering, they could soon bleed clients to the financial services giant. The group says their comprehensive insurance premiums have been extensively ‘tested’ and will compare favourably with competitors in the short-term space.

It has also made some impressive promises including car hire at no additional cost, a ‘no blame, no excess’ policy (the excess is waived on theft, hijacking, hail, storm or fire events), roadside assistance and accident assistance, among others. Drivers who activate the DQ Track service will also have access to nationwide stolen vehicle tracking and recovery at no extra cost.

Good news for brokers

Discovery will market the insurance product through its extensive independent intermediary and tied agent force and will pay broker commission in line with industry standards.

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