Brokers who are prepared to invest in some education and possibly technology could be positioned to use their ‘trusted advisor’ status to benefit from a trend to Telematics insurance programs.
Telematics for insurance has received a fair amount of trade press and has demonstrated traction in Europe, the UK, the US and elsewhere (see, e.g., our January 23rd post on Telematics’ Momentum). This traction is driving new data standards development in the UK and US. Over three-quarters of respondents to a February Insurance-Canada.ca poll believe that Telematics is either being used or on a near horizon for use in Canada.
However, there has been little discussion about the impact on distribution channels. The common wisdom has been that independent brokers were at something of a disadvantage as Telematics would increase differences in rating criteria among underwriting carriers.
Turns out some notable brokers in the UK actively disagree. As reported in InsuranceAge, a UK publication serving the broker community, some brokers see Telematics as one tool to help preserve their independence, assuming that brokers are prepared to invest time and money to prepare to serve their customers.
Nigel Lombard, managing director at Motaquote, a Welsh broker, says that brokerages such as his are in the best position to help customers understand the benefits of and requirements for the new rating methods, explaining: “Initially, the hardest thing was to make sure our customers fully understood. They have a lot of questions. How does it work? Will it affect my car? How are you going to use my information?”
The broker has the advantage of looking at his/her clients as potential candidates for pay-as-you-drive schemes. without having to impose it on all clients. “It’s not the only option, but it’s a good one,” Lombard said. The key is for brokers to prepare. This will mean discussing the option with markets and determining appetites for different risk profiles.
It will also mean investing in education to learn how telematics works, and possibly investing in technology to begin to store client use data. Lombard explained: “You have to ask different questions, and a few more questions. For instance, you now have to ask them ‘What type of roads do you drive on?’ and ask about when they do most of their driving, and establish how late they drive.”
But Lombard sees this as the reason why independent professional advice will be so valuable. And the investment could result in better retention. Lombard notes that while Telematics is not for everyone, “People who see the benefits will go for it again and again.”
