{"id":9302,"date":"2021-01-16T12:17:02","date_gmt":"2021-01-16T11:17:02","guid":{"rendered":"https:\/\/advancedfleetmanagementconsulting.com\/eng\/?p=9302"},"modified":"2021-01-16T12:17:02","modified_gmt":"2021-01-16T11:17:02","slug":"insurance-2","status":"publish","type":"post","link":"https:\/\/advancedfleetmanagementconsulting.com\/eng\/2021\/01\/16\/insurance-2\/","title":{"rendered":"Building Insurance Business Using Data to Set Prices"},"content":{"rendered":"

TU-Automotive reported in November that General Motors is launching itself into the insurance market<\/a>.<\/span><\/p>\n

The aim is to use driving and vehicle data to set insurance prices employing its established OnStar service. This is the automaker\u2019s connected-car service, which is installed on all GM vehicles in North America. Customers who sign up, agree to permit their driving habits to be tracked remotely. Drivers who obey speeding limits or avoid sudden stops as well as demonstrating good overall driving behavior are rewarded with cheaper insurance premiums.<\/span><\/p>\n

UBI trends<\/strong><\/span><\/p>\n

Katie DeGraaf, head of telematics at OnStar Insurance Services explains: \u201cCustomer interest in driving and mileage-based insurance (UBI) products has accelerated owing to Covid-19 pandemic and also to general digital service sophistication,\u201d adding that throughout the pandemic customers have increased their use of digital insurance services. However, their driving has decreased.<\/span><\/p>\n

She therefore comments: \u201cAt the height of the pandemic, aggregate US driving was down just over 50%.\u00a0 Today, we remain down close to 30% compared to prior years.\u00a0 As companies shift to more remote work flexibility, we don\u2019t know how or when driving trends will stabilize.\u00a0 This change in driving, coupled with more time to assess insurance decisions, customers have adopted technology-driven insurance solutions, including usage- and mileage-based pricing.\u201d<\/span><\/p>\n

Another trend that she is seeing is revolves around the insurance industry\u2019s increasing investment in the customer adoption of technology-based solutions. She finds that this isn\u2019t without its challenges. There is an increased focus and prioritization of UBI. To drive adoption several of the largest insurance, she says, continue to run large marketing campaigns. The aim is to drive consumer awareness about this type of insurance.<\/span><\/p>\n

\u201cIncumbent insurers have also increased their use of driving-based factors in their ratings, including increasing surcharging and discounting,\u201d she explains before adding: \u201cWe expect to see this trend continue.\u00a0 In addition, throughout the pandemic, most insurers rapidly accelerated their maturity in digital claims handling. Taken together, this demonstrates an overall maturity in digital transformation of customer insurance services.\u201d<\/span><\/p>\n

Smartphone-based solutions are currently dominating the market, and they are currently being used to understand driving behavior. DeGraaf believes these solutions reduce customer friction, while cutting insurer\u2019s operating costs in comparison to at least of the previous models that used aftermarket technology.<\/span><\/p>\n

\u201cIn parallel to this, smartphone hardware and software companies have increased customer transparency and control in data sharing\u201d, she explains.\u00a0 The key issue though is that insurers telematics programs this has often resulted in \u201cfewer connections and poorer quality data.\u201d<\/span><\/p>\n

Stream of innovations<\/strong><\/span><\/p>\n

Frederic Bruneteau, managing director, Ptolemus Consulting Group says since UBI was invented, there has been a stream of innovations. However, as indicated by DeGraaf, he concurs that the market started with \u201caftermarket devices such as black boxes and OBD dongles, OEMs \u2013 GM being one of the first \u2013 have been collecting data for insurance for over five years\u201d. Mobile apps, he says, have successfully emerged within the last three to four years to collect driving data. \u201cMost apps have been used to collect driving behavior data for Pay How You Drive (PHYD) insurance,\u201d he explains.<\/span><\/p>\n

He notes that the fast growth of connected cars \u201cis facilitating the collection of mileage data by insurers, either directly from OEMs or through Vehicle Data Hubs (VDHs) such as LexisNexis or Wejo\u201d. As for mileage-based insurance, he says it\u2019s extremely simple to understand, less intrusive than pay how you drive (PHYD) insurance.<\/span><\/p>\n

\u201cFor all infrequent or low mileage drivers, it is good enough. This has driven the success of a company like Metromile\u201d, and so in his opinion there is room in the market for multiple device solutions to co-exist. Each solution has its own specific advantages and use cases.<\/span><\/p>\n

Pandemic imbalances<\/strong><\/span><\/p>\n

This multi-solution co-existence is perhaps particularly poignant because he points out that the pandemic has created significant imbalances in policyholders\u2019 mobility. He explains: \u201cSome are not moving at all and are still paying the same amount. With the growth of remote working, this is only likely to continue. This situation creates the right conditions for an explosion of mileage-based insurance where everybody pays based on how much they drive.\u201d<\/span><\/p>\n

He also points out that it\u2019s not new for automakers to sell insurance: \u201cEven selling data to insurers has been around for a long time. GM has been selling mileage data for quite a while now. Many insurers have access to their data, from Progressive to State Farm.\u201d<\/span><\/p>\n

\u201cCertain OEMs such as Toyota even have integrated insurance for a long time with a specific partner, Aioi Nissay Dowa. Some OEMs, such as Volkswagen, are working with an integrated partner, Allianz, with whom they have strong ties for insurance. Some other OEMs tend to shop around for the best insurance deal and change insurance partner regularly. For example, PSA would sell its insurance as PSA Insurance, but the policy would be underwritten by an external partner that would change every few years. And then there is a third model where OEMs work with multiple insurers. Tesla is another OEM looking at how it can customize insurance for the benefit of the customer.\u201d<\/span><\/p>\n

OEM insurance branding<\/strong><\/span><\/p>\n

So, what\u2019s new about what GM is doing? Well, first of all it is launching OnStar under its own brand as GM OnStar. However, OnStar itself isn\u2019t new. It\u2019s been around for 20 years now as GM\u2019s connected car service. Beyond UBI, it also offers automatic crash notification (ACN) and assistance. \u201cGM can detect when you have had a crash, how severe it is, send assistance, call your vehicle, and provide you another vehicle,\u201d he reveals.<\/span><\/p>\n

There are also concierge services, and they are trying to differentiate by offering more intelligent insurance. The price is based on how much you drive and how safe you drive. \u201cThe safer you drive, the less you pay for your insurance, and the benefit here is as an OEM you can provide mileage-based insurance. If you drive less, you will automatically pay less,\u201d he explains.<\/span><\/p>\n

In March 2020 this led to several insurers in the US sending much money back to their customers. That\u2019s because they weren\u2019t driving so much in response to the Covid-19 pandemic. He adds that there is a prerequisite to understand the parameters. For example, it\u2019s riskier to drive at night or during a hurricane. For those people that are subscribed to the OnStar service, they can also have crash assistance.<\/span><\/p>\n

OEM insurance advantages<\/strong><\/span><\/p>\n

As far as OnStar is concerned, the advantages of automakers developing their own insurance businesses is significant because they know their vehicles, safety, repair and maintenance better than anyone. DeGraaf adds: \u201cOnStar helps more than 6,000 drivers per month at the time of the unexpected.\u00a0 For more than 20 years, GM and OnStar have iterated on leveraging technology, connectivity, data and customer experience to understand safety and provide proactive help to drivers.\u201d<\/span><\/p>\n

Bruneteau responds: \u201cI am putting myself in the shoes of OEMs. For me, the major advantage is the fact you are creating a long-term relationship with your customer. With warranties that last up to 2-4 years, OEMs generally keep the customer relationship during that period but then lose it quickly afterwards. When they sell connected insurance, they can sell you customized insurance by knowing when you are driving, how safely you drive and how often you drive to offer better insurance pricing, which will help maintain the relationship for a long time.\u201d<\/span><\/p>\n

De Graaf concludes that the current underlying trends are in OnStar\u2019s and GM\u2019s favor because she finds that \u201ccustomers expect to have personalized, digital and easy experiences that are proactive in solving their problems and keeping them safer.\u201d<\/span><\/p>\n

To this end she says OnStar Insurance is able to leverage technology to provide insurance that is both fair and personalized. This is aided by the fact that as an OEM, GM, can leverage its customer touchpoints throughout the vehicle\u2019s ownership period. Through this, GM hopes its business model will be increasingly efficient, leading to a better insurance price.<\/span><\/p>\n

 <\/p>\n

by Graham Jarvis<\/p>\n

Source: https:\/\/www.tu-auto.com<\/a><\/span><\/p>\n

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TU-Automotive reported in November that General Motors is launching itself into the insurance market. The aim is to use driving and vehicle data to set insurance prices employing its established OnStar service. This is the automaker\u2019s connected-car service, which is installed on all GM vehicles in North America. Customers who sign up, agree to permit…<\/p>\n","protected":false},"author":3,"featured_media":9303,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[18],"tags":[103],"_links":{"self":[{"href":"https:\/\/advancedfleetmanagementconsulting.com\/eng\/wp-json\/wp\/v2\/posts\/9302"}],"collection":[{"href":"https:\/\/advancedfleetmanagementconsulting.com\/eng\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/advancedfleetmanagementconsulting.com\/eng\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/advancedfleetmanagementconsulting.com\/eng\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/advancedfleetmanagementconsulting.com\/eng\/wp-json\/wp\/v2\/comments?post=9302"}],"version-history":[{"count":1,"href":"https:\/\/advancedfleetmanagementconsulting.com\/eng\/wp-json\/wp\/v2\/posts\/9302\/revisions"}],"predecessor-version":[{"id":9304,"href":"https:\/\/advancedfleetmanagementconsulting.com\/eng\/wp-json\/wp\/v2\/posts\/9302\/revisions\/9304"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/advancedfleetmanagementconsulting.com\/eng\/wp-json\/wp\/v2\/media\/9303"}],"wp:attachment":[{"href":"https:\/\/advancedfleetmanagementconsulting.com\/eng\/wp-json\/wp\/v2\/media?parent=9302"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/advancedfleetmanagementconsulting.com\/eng\/wp-json\/wp\/v2\/categories?post=9302"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/advancedfleetmanagementconsulting.com\/eng\/wp-json\/wp\/v2\/tags?post=9302"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}