According to Ted Gramer, CEO of TrueMotion, a mobile telematics firm in Boston, the most seismic shift in car insurance since it began over 100 years and it’s occurring now. Gramer wrote an article on the 5 car insurance trends he sees either beginning or unfolding this year. The article was published by Insurance Journal and provides some interesting insight into changes many consumers will find interesting, refreshing, and possibly long overdue. I think his observations are worth sharing here.
Here’s how he sees 2018 unfolding:
- The customer will win. Low engagement, poor satisfaction and complicated processes will not survive in the $200 billion U.S. auto insurance market. Consumers have come to expect delightful experiences like they have with Amazon, Google and Apple, and they benchmark all company experiences against them. Auto insurance is no exception. Either incumbents will figure it out or new entrants will. In 2018, we’ll see the battle heat up with a focus on the customer experience.
- Expect UBI 2.0. The results are in: Driving data is highly predictive, mobile telematics has reduced the barriers to entry, consumers are signing up, and the carriers that started early are winning. Expect carriers to leverage driving data in new and innovative ways that go broader than just price targeting high-value segments. This will include levels of personalization not possible before, using mobile channels to drive customer engagement and loyalty. Carriers that have fallen behind will scramble to catch up.
- A massive opportunity in claims will fully emerge. After decades of claims functioning as the old school, back office part of the business, carriers are seeing the potential for game-changing impact on the customer experience, expenses and loss costs. In five years, claims will look nothing like it does today. The mosaic will be filled in beginning in 2018.
- The hype around connected cars and autonomous vehicles will continue. The key word being hype. The ugly math is that it will still be at least 15 years until connected cars penetrate half the U.S. vehicle fleet. Level 5 autonomy will take even longer. Unfortunately, the auto insurance deck will likely be reshuffled before then. To prepare for the transition, carriers will look to smartphone data to help – it delivers over 70 percent of connected car data, plus distracted driving data. Smartphones also provide new engagement opportunities. And, carriers don’t have to wait – more than 85 percent of drivers own one today.
- Outrage with distraction will reach a peak. After more than 3,400 thousand lives lost in 2015 alone and countless accidents as a result of smartphone use in cars, consumers, regulators and insurers will step up their game. Laws have generated short-term effects and general awareness campaigns have produced limited results. Smartphone-based efforts, however, have proven to reduce distracted driving by 20 percent. States will also review how they’re collecting and reporting distracted driving data, which has been significantly underreported to date. Expect some big new ideas that tilt the curve.
I like his predictions. I believe these shifts are underway and will begin to unfold in 2018. There are a couple of issues all carriers need to address for this to happen.
- Carriers need to determine how to provide a delightful experience to their clients and partner with agents and advisors to provide that. It more than providing an online payment portal and access to your documents.
- The client benefits for Usage Based Insurance need to be explained. Implementing the technology should be done with a smart phone app, not some device that plugs into your car’s computer port.
- The claim experience must greatly improve with better communications on scheduling, time in the shop, quality of parts, and options for the client.
- Most drivers know better than to text and drive, however, that is just the tip of the distracted driving iceberg. More driver education is needed, and the technology must improve to support that. Common user interfaces with vehicle systems should improve too.
What do you think? Share your comments, questions, and blue-sky thoughts with me on my Facebook, Google +, and LinkedIn pages. I’d love to hear from you!