Within the U.S. market, Usage Based Insurance (UBI) (a.k.a. Telematics) is primarily marketed as a means of lowering premium. As discussed in a previous post on Usage Based Insurance, a driver allows the insurer to monitor his/her driving behavior, and in exchange for safe driving habits, the driver receives a discounted premium. But these programs also offer an opportunity for a carrier to provide value-added services to their customers, an opportunity to craft a product rather than to offer the lowest price on what is often seen as a commodity. Depending on the device chosen and the data collected, a wealth of services can be offered that allow for additional touch points between the carrier and the insured, beyond bill paying and claims settlement.
For example, safety related services could form the foundation for an offering. The UBI device could be used to monitor, and proactively report to the driver, information about needed car maintenance items. It could also be used to offer road-side and accident assistance, to remotely unlock a vehicle, or to locate a lost or stolen vehicle. For a driver who is searching for his/her car in a large, dark parking lot, this last ability could be both a major convenience and a huge safety feature.
Teen or Elderly driver monitoring services could be the basis of another offering. For example, the UBI device could send text messages when a vehicle arrived, as expected, at a certain destination (e.g. when a student arrived home from school each day). Similarly, the device could issue an alert when driven outside certain preset geographic boundaries, speed limits, or curfews (e.g. when an elderly driver operated the vehicle at rush hour). The device could also be used to provide mapping, showing where a vehicle was driven or locating a vehicle/family member at any given time.
Innovative gaming techniques and feedback mechanisms could be used to provide driver guidance. These tools would allow each driver in the household to profile and compare his/her habits to others in the household and to the “average” driver. The integration of gaming into current feedback loops would better engage drivers. By comparing driving profiles over time and by competing to improve their profiles, drivers would also improve their driving habits.
While many of these services are available through various venues, a carrier can use a telematics offering to craft a product that provides both value and service to its customers. It can attract and retain customers by providing a unique blend of tools that provide benefit on a daily basis rather than a basic promise of service when an accident occurs. By carefully considering its target market and by focusing on services of benefit to that market, a carrier can differentiate itself within an increasingly commoditized field. As UBI programs permeate the market, smart carriers will leverage their capabilities for far more than another way to compete on price.