Turn right to embrace customer needs

Vehicle telematics is not new and has been a mainstay in the local market for a while now. Yet, the main application has been for stolen vehicle recovery and mileage based insurance products.

And while we have all heard the tales of the benefits vehicle telematics can bring, only a single South African insurer offers behaviour based products and automatic emergency calling systems are still a distant aspiration.

The interconnected world

However, in a world where everything is connected, changing consumer behaviour and technological advancements are altering the insurance industry. Services like Uber and rentals are changing the profiles of clientele.

Millennials expect exceptional service and value personalisation. Insurance technology, or insurtech, and peer-to-peer start-ups like Lemonade, which raised $13 million from venture investors, threaten to usurp traditional insurers.

Insurers are no longer expected to just cover the unpredictable, but to anticipate the unpredictable too. They must adapt to the needs of a digital economy. Therefore, it is becoming increasingly important to obtain intelligence from the data provided by vehicle telematics and use it to deliver better products and services.

Mining the data

Companies are evolving to take advantage of the quantity of data that they collect on a daily basis. How does access to this data change thinking?

As an example, let’s take a look at a data analysis investigation of a client. Tracy is a trendy and sophisticated millennial equipped with the latest technology and gadgets. She is online and connected 24/7, 365 days a year. We decided to look at how Tracy’s needs and habits have changed over time and how we might go about building future value for her.

By analysing the massive quantity of data and information we had on her, from where she lives, works and plays to how often she drives and how much time she’s spending in her car, we were able to draw out certain patterns and predict future occurrences. Most importantly, the exercise looked for the wants and needs that hadn’t even been noticed yet.

We know Tracy’s address has changed three times in the last six years. She has gone from being a student to being employed, self-employed and back to being employed again. She has only visited a traditional dealership twice and services her vehicle at an independent workshop. Her primary grocery store has also changed.

As we monitor these trends we can see that her mobility habits have changed. Distance travelled is down by 37% and the duration of an average trip is down by 15%. Weekend and night time driving are also significantly lower.

The value of the data

This information reveals that the cost of Tracy’s mobility is increasing. The fixed cost of her vehicle is the same but she’s doing fewer kilometres. So what do we do with this information?

Data transformed into insight helps insurers to address consumer needs effectively. We could suggest that Tracy downsizes to a more affordable and cost effective option. Perhaps she’d like the option of a car rental and could be offered reduced rates for good driver behaviour.

Embracing behaviour rewards

Consumers are ready to embrace driver tracking in favour of behaviour based policies with customer-friendly pricing and a more personal approach. They would also welcome protection as a service, such as receiving real-time alerts on upcoming hazards during the car journey, for example potholes or traffic at a standstill just over the hill.

However, the local insurance industry is slow to change. Many insurers are concerned about the costs and difficulty of transforming their business due to legacy systems. Sure, investments will be sizable, but doing nothing or not evolving fast enough could cost far more. So what are you doing about your customers’ changing needs?