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.