Welcome to the world of Telematics

Recently I wrote a cover letter for a UBI Telematics proposal, to help our customer understand the implications of moving from a traditional insurance approach to the new world of connected insurance. Let me know what you think…

Dear insurance colleague,

Thank you for the opportunity to participate in this selection process, as it marks the commencement of an incredible journey for your organization, one that we and our partners are honored to be assisting you with at this time. You should not be looking at this as simply another technology selection about devices and mobile Apps, as Usage Based Insurance (UBI), is a fundamental shift in the relationship between the insurer and the customer. We have seen this trend slowly but surely growing in the US and Europe, as more and more insurers catch on to the benefits that data engaged insurance products open up. As an early adopter of UBI, based on actuarial strength data, you are setting yourself to be a leader in the market, using data and insights to craft new propositions – a real Digital Insurer. As you must realize, being engaged with customers on a day-to-day basis is a huge change in culture. For the first time, you will be able to change driving behavior enabling you to reduce accidents. For the first time, you will immediately know when the vehicle you are insuring has been involved in an “incident” – even if the driver is not present and you will also be able to proactively reach out to find if a claim has occurred. By re-engineering your processes around the engagement a UBI proposition gives you, you can effectively put the customer back as your center of focus and provide a whole range of value-added services that your competitors could only dream about. UBI is game-changing, shifting the conversation about motor insurance from price to value, and leaving your competitors scrambling without data. When executing this strategy you will find a number of benefits:

  1. First to market will gain mind share and attract the safer drivers away from competitors.
  2. If you pivot and embrace the customer focus afforded to you by UBI, your retention and renewal ratio will increase.
  3. With driving behavior feedback, based on accurate, always-on data, you will be able to improve the driving skill of a majority of your portfolio, hence reducing your incurred claims.
  4. Armed with this same always-on actuarial data, you will be able to manage out those policies that display the most risk before they claim, further improving your underwriting result
  5. Being proactive with claims will make it that much more difficult to commit  fraud and make your competitors look like far easier targets.
  6. Improved claim handling will give you a further boost in customer satisfaction and retention

This is a journey and many of these benefits are not seen overnight. Our successful customers will tell you that all of these benefits are achievable and contribute to real tangible bottom line results but only as they adjust to and exploit the new reality that UBI affords. So thank you again for inviting us on your journey, and we hope that the answers that we have put together prove satisfactory. We stand ready to assist you in moving beyond bland facts and figures provided here into a world of possibility in achieving break-through results. Yours sincerely,

So there you have it. A Telematics proposition is not your ordinary technology procurement, it’s a change in your business model.


Andrew Dart is a former Insurance Industry Strategist at CSC. Follow him on Twitter @ITInsuranceGuy.

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