Telematics: Using Technology To Offer Better Premiums To Your Customers Whilst Keeping You Profitable
All insurance companies want to offer the lowest premiums. After all, offering low prices helps them attract more customers and stay ahead of the competition. But it’s not that simple.
Lowering their prices too much risks driving down profits, which hurts the company in the long run. Putting their business into financial difficulty helps nobody. Employees risk losing their jobs, and they can no longer offer competitive rates to policyholders.
Instead, they aim to strike a careful balance between value for money and growth. Growth allows them to create more jobs, but increased profitability means they can justify keeping prices low too.
Why Driving Safely Is So Important
In an ideal world, all road users would drive as safely as possible. They’d never speed, take risks, or make mistakes. But that’s simply not realistic; accidents happen, and when they do it drives up premiums. Insurers need their customers to understand that reckless driving is one of the things that force them to raise their prices. Road users need to play their part.
Many accidents are avoidable, and drivers who maintain a cautious and safe driving style tend to have less of them. This means safer driving is within both the interest of the insurer and the customer. Therefore, making the roads a safer place needs to be a team effort.
But how can insurance companies help their customers to become safer drivers?
Investing in telematics technology may be the answer. This hardware/software keeps track of your customer’s driving habits, be they good or bad. The software advises customers how they could have made their journey safer through practical tips, backed up by hard data.
Drivers who are committed to improving their road safety will take this advice on board and strive to improve. But as telematics technology is offered through their insurance company, customers have another significant motivator – reduced premiums.
They will be well aware that their driving habits are scrutinised by the very people who set their annual premiums. Therefore, they’ll be keen to drive safely to pay less when their premium is up for renewal.
Some customers will be uncomfortable with being monitored this way, so they will resist telematics technology. But savvy customers will see the benefit to them. For the first time, they have more control over what they pay and can influence it through their own actions.
Their safe driving habits will be backed up by demonstrable data. They can point to this and make their case for a lower premium. This way, safe drivers earn the rewards they deserve.
As insurers, we can rest easy in the knowledge that such customers are less of a risk and grant them what they deserve.
We can gladly offer them lower premiums as we trust the data the technology has provided. Of course, accidents can still happen. But with these drivers, the likelihood of them is significantly reduced. It offers us a fantastic opportunity to treat customers fairly, honestly, and based on their history as a safe driver.
The benefits don’t end there though. Other drivers will recognise the rewards associated with telematics technology, or at least with the insurers that offer it. They will
want to join such companies and will be prepared to improve their driving just to save money.
Careful drivers will be drawn by the possibility of lower premiums, while other motorists will seek to become safer drivers to also take advantage too. Ultimately this technology will attract a greater number of conscientious customers, those who are keen to drive safer and work with an insurer who helps them do so.
While we don’t expect these changes to happen overnight but introducing and offering telematics technology to your customers now will begin this process. Then through technology, your insurance company can start to offer lower premiums, but enough of them to remain profitable all year round.
Where Do I Start?
The technology helps customers become aware of the things distracting them, then works proactively to eliminate these threats to their safety. But it also offers so much more.
Telematics offers a practical way for customers and insurers to work together to make the roads a safer environment. And all make savings at the same time.
Saving money on our car insurance is something we all want to do. But when the time comes to switch providers, we look at who’s offering the lowest price and base our decision on that alone.
This can be a false economy, because 12 months later, when it comes time to shop around again, we do this exact same dance. While we might save a few pound, it’s more work on our part, and we don’t really gain much else.
It’s frustrating because it would be easier for us, and insurers, if we could form a long-lasting relationship with one company instead. One in which our policy decreased in price every year instead of increased – which is so often the case.
Why Do Our Policies Go Up In Price?
In truth, our policies go up in price based on economic factors beyond our and our insurers control. But prices are also influenced by accident statistics and risk calculation. Those of us who’ve claimed our motor insurance tend to understand and accept that our policies will go up in price – especially if the claim was our fault in part.
This is frustrating for those of us who’ve never claimed or been involved in an accident. We feel a sense of injustice when we drive carefully; but then end up paying more money due to other people’s negligence or mistakes.
If only there were another option and a solution to this problem. Well, now, due to advances in technology; there is.
Telematics Technology Can Offer The Solution
While still somewhat obscure, telematics technology is growing in popularity and importance. We think it’s intrinsically linked with the future of car insurance, as more and more people discover the benefits.
The technology records motorists’ habits and offers them scores after each car journey. As well as practical feedback and tips on how they could improve their driving skills in general. But based on their individual actions and backed up by real-life data.
Telematics software collects this data over time, including each driver’s improvements, and feeds it back to their insurer. Then, when it comes time to renew their policy, the insurer will be able to calculate their new premium based on their actual driving behaviours.
If that driver has steadily improved or achieved consistently high driving scores, the insurer will struggle to justify increasing the policy price. This gives the customer a degree of control over their own policy – for the first time ever.
Of course, the policy may go up in price for other reasons. But for once, a customer can legitimately challenge a price hike and use actual data to reasonably argue for a discount. This way, both insurers and customers can work together to make their premiums more affordable instead of jumping ship every year or two.
Careful Drivers Stand To Make The Most Savings
Not all motorists will be comfortable with being monitored by their insurance company in this way. They may have reservations about possible surveillance, but it isn’t really that. It’s merely a way to improve road safety, so insurers can justify offering the best prices to the safest drivers. Instead of all motorists being punished because of a few bad drivers.
Drivers that are already careful when behind the wheel have nothing to lose and everything to gain. They won’t need to change a thing and can just look forward to the savings they’re going to make. Drivers who are concerned with their own and their family’s safety will also feel the benefit.
Only those most resistant to change would consider not to use this technology. Many of us are attached to our bad habits and have no desire to stop indulging them. Using or not using mobile telematics is entirely our choice, but should our premium increase, we only have ourselves to answer to.
The current UK market leaders are Bluesona, who offer their LoopMatics software to customers through various insurance companies. LoopMatics helps motorists overcome distracted driving, as well as offering other excellent methods to improve safety behind the wheel. The company is partnering with an increasing number of insurers and is well on its way to becoming a household name.
To get involved, once your car insurance comes ready for renewal, ask your insurer if they use this technology. If not, find one that does to take full advantage of telematics.