Auto Insurance Digitization: Is Your Company Behind the Times?
Michael Chen

Auto Insurance Digitization: Is Your Company Behind the Times?

Michael Chen August 31, 2015 Posted in: Blog Posts, Telematics / UBI
Our team of predictive analytics and telematics experts are truly excited to visit with attendees of the upcoming Insurance Telematics USA conference, September 2 – 3, at Chicago’s Radisson Blu Aqua Hotel. Please join us at booth #9, and allow us the opportunity to explain how Pinnacle and our strategic partner, Driveway Software (exhibiting at booth #11), can work to find an effective and innovative UBI solution for you.

I’d like to share a post from Driveway Software’s co-founder, Jake Diner, looking at auto insurance digitization. Enjoy Jake’s thoughts and be sure to visit booth #9.

Guest Blogger, Jake Diner (original post April 3, 2015)
It’s no secret that digitization brings the potential to transform the auto insurance industry from the ground up. For one thing, it can expand an insurer’s service offerings. According to the Bain brief, “For insurance companies, the day of digital reckoning” some carriers are leveraging mobile apps to let their customers add a vehicle, get a quote, file a claim or pay bills.

When an insurer manages to “integrate disparate channels into a seamless experience,” as Bain said, it clearly benefits the customer. But it also benefits the company.

How digitization can optimize your business processes

Cognizant, a company specializing in business optimization, keyed into telematics as a major opportunity to boost efficiencies in auto insurance. In their words, usage based insurance is “laying the foundation for better decisions and core business process optimization.”

How? When an insurer integrates telematics into its core systems, including “policy administration, actuarial and underwriting, billing and claims, as well as new action-oriented policyholder portals,” it can achieve “more predictive and faster decisions … perhaps even in real time.” Meanwhile, manual work and time-intensive tasks “can be streamlined or eliminated as processes are automated with accurate geo-spatial and vehicle data.”

The result, Cognizant said, is a “noticeable impact on loss ratios,” with additional, quantifiable savings continuing to roll in, as insurers continue to collect and analyze UBI data.

Why are auto insurers falling behind?

Digitization isn’t just creating new efficiencies for auto insurers. It’s transforming business processes for industries across the board, from healthcare to finance. But as the news site Shanghai Daily pointed out last month, while “the financial sector is racing to embrace digital technology to boost sales and drive profits, the traditionally staid insurance industry is in danger of falling behind.”

If you were to rate your company on a scale of one to 10, how fully have you leveraged mobile technology to optimize your business processes?

Two benefits: business efficiencies, customer retention

Usage based insurance doesn’t just bring the potential to improve efficiencies; it can also improve customer retention – which stems in part from lower premiums, as well as a closer customer relationship. “That’s the Holy Grail for insurers,” Deloitte University Press said, “establishing brand stickiness by offering ongoing value to policyholders beyond the price charged for coverage and claim service provided.”

The other side of the retention coin is, interestingly enough, inconvenience. When a customer would have to cancel online bill-pay for their insurance provider and then set it up all over again with a new organization, for example, it could deter them from switching carriers in the first place, unless they were seriously disgruntled.

Bottom line, “most executives recognize that they’re on the threshold of a once-in-a-generation opportunity to both reduce costs and foster new streams of profitable revenue growth,” Bain said, speaking of digitization. And UBI telematics is a central component of that opportunity.

Want to learn more about smartphone UBI? Download our Fact Sheet.

mchen@pinnacleactuaries.com


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