Connected Insurance: better policies with the help of car data

All players on the motor insurance market need to embrace the connected car information and find ways to utilize it to engage users. There are 3 main areas insurers can use car data for and that helps them stay relevant in the customer’s eyes.

Let’s start with the most important person in any vehicle for insurance companies – the vehicle owner. Vehicle owners are people that are most likely to drive the car, pay for all relevant maintenance and service costs, and are also purchasing insurance policies for their tin pets. They also want to know what is happening with the car. Sure, the driver dashboard gives them some information, but it is only the basics that mean much more to a mechanic than to a regular Joe.

We can compare the evolution that started happening in insurance to the experience of supermarket shopping – it was okay to offer only brick and mortar stores that have anything people might need within them in the 90s, but today a lot of shopping happens online and even more shopping decisions – such as which supermarket to go to, and what to buy there, whether to order online or go to a physical store. Traditional retailers still exist, but they are surviving rather than thriving.

The same is happening with the insurance industry- there are traditional insurers who still do sales exclusively through agents, but they are being challenged by digital insurance brokers, digitalized traditional insurances and similar companies that are taking their chunk of the market. In order to compete and stay relevant, all players on the motor insurance market need to embrace the connected car information and find ways to utilize it to engage users. 

This brings us to 3 main areas insurers can use car data for and that helps them stay relevant in the customer’s eyes.

Bottom-line goals support

Connected car data can help insurance companies reduce claims. Before someone becomes a client, this type of data can allow insight into their driving patterns, which impacts the driving risk assessment strategy, allows a better choice of drivers and possibility to offer uncompetitive rates to others, while monitoring driving behavior throughout the customer lifecycle. This type of positive discrimination in choosing clients is called the self-selection principle. 

Reducing claims and better risk prevention

If connected car data is coupled with an app that allows direct communication to the customer, it also enables insurers to impact the driving behavior in order to reduce claims. Like UBI, if special attention is given to already recognized high-risk segments, the payoffs in the opportunity cost of not insuring the riskiest drivers will be higher.  

It comes down to the risk prevention strategy of the insurer. It is possible to set up special gamification mechanisms for different segments of users which encourage them to exhibit certain types of behavior. 

For example, if a specific area is notorious for speeding, gamification mechanisms can reward driving under the speed limit in that area. If someone is accelerating and braking a lot or has a lot of phone handling events during trips, that is something they need to be encouraged not to do, or to use a hands-free device if it is necessary to accept calls.

Last, but with the possibility of making a massive impact, is receiving the first notification of loss (FNOL) with information coming directly from the car that can help reconstruct the accident and minimize the possibility of fraud. The first notification of loss means that an accident is reported as soon as it happens. This drastically reduces the likelihood of faking injuries or the amount of material damage that happened in the accident. 

Increased customer loyalty

Imagine this – insured vehicle runs out of oil and their phone battery is dead. Insurers can get notifications on things like this, with their GPS coordinates, which will enable insurers to send help and make sure customer gets a rent a car, accommodation, or whatever else they need at that moment, depending on how serious the damage is. Possibility of this can be an added coverage in cases of longer travel for customers that are servicing their cars regularly. This can also work with sending police and an ambulance in case of a crash.

Connected car information allows insurers to offer additional rewards – like free tire storage for customers that are acting as a responsible owner and are in such areas that they are less likely to get into a situation where they would file a claim. Also added benefits are something they will get used to and it will become a barrier to exit if they start thinking about shifting motor insurance providers.

Car thefts are an increasing problem. Newer vehicles end up in chop shops and are used for spare parts before the owners are even aware of the fact that their vehicle is gone. Connected car data helps by allowing owners to get a notification if their car is not where they think it is, and that allows them to react in the shortest period of time – often a key differentiator between cars that are saved and brought back to their owners and those that are never retrieved.

Competitiveness and top-line goals increase

Connected to the point made above, connected car data helps insurers become a marketplace where car owners can satisfy all their needs. Not just roadside assistance, it can be connected to longer service chain with carwashes, mechanics, tire repair shops, emergency services, etc. As an insurance company, this is opening the possibility of new revenue streams.

A connected car combined with a smartphone offers a complete picture of someone’s behavior. That allows different cross-sell opportunities, like different types of short-term insurance, insurance shields for certain types of damages, etc.

Working with the Amodo platform

Amodo can provide information coming directly from the connected car through an API. We can also provide an app or SDK that would help you get the full picture of the customer and engage them to get the most value.

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