Telematics and Usage Based Insurance (UBI) promise substantial benefits to insurers, and, presumably, insureds as well. However, as we have noted, consumer demand has yet to materialize in Canada. A recent article suggests a novel approach to encourage this demand.
Telematics issues and opportunities will be featured at the 2013 Insurance-Canada.ca Technology Conference, In preparation, we’d like your thoughts on consumer demand and possible new marketing approaches.
Are we assuming too much about consumers’ interests?
In a recent article on Usage Based Insurance posted on the Telematics Update site, Roger Lancelot, Associate Director at marketing forecaster, Strategy Analytics, challenges some of the assumptions that insurers are making about consumer uptake for UBI and makes an interesting proposal that marries UBI with location based marketing to create, what he suggests will be, a more perfect storm.
Lancelot notes that insurers have taken the tack of using discounts for better driving behaviour to lure customers. He suggests that this may attract some consumers, but doesn’t work well for a wider audience; noting that there are fewer than 2.5 million UBI users world-wide. He writes: “The daily relevance of an insurance discount is less a benefit than a sword of Damocles swinging over the head of the driver in case that driver deviates from his or her previously safe pattern of driving.”
Will consumers respond to an affinity approach?
The solution, according to Lancelot, is a “comprehensive affinity program” which would see insurers, governmental entities, and others interested in incenting good driving behaviour, link up with suppliers such as road side franchise operators to reward “good behavior with more than just insurance discounts based on intrusive tracking systems.”
Lancelot wites: “A free cup of coffee, tank of gas, parking space, hamburger or oil change ought to be enough to convince nearly any driver to be willing to share their location information and vehicle data.”
Other approaches …
We have noted other approaches, including partnerships with driving schools. We also have a nomination for an Insurance-Canada.ca Technology Award for State Farm Canada’s new app which allows drivers to monitor their own driving behaviour using their cell phones. This is intended to encourage safe driving generally and, presumably, promote the State Farm Canada brand.
It appears that marketing might be the battle ground for the success of UBI.
What do you think (and where you can hear other thoughts)….
We’d like to know what you think. Is Lancelot right that lower premiums are not enough to promote UBI? Will safer driving itself incent insureds? Would you make insurance decisions based on free Timmy’s for the policy year? How about free Starbucks?
Leave your comments below. And, if you want to get into a live conversation, register for the 2013 Insurance-Canada.ca Technology Conference March 18/19, 2013 in Toronto. There will be several sessions, including a Day 1 Telematics and UBI Boot Camp which will feature experts to address a variety of issues, including consumer adoption.
And, we will offer you free coffee.