Auto insurance has one of the highest Net Promotor Scores™ of any industry, yet nearly all auto insurers struggle to engage with their policyholders in a positive and constructive way. Telematics can play a significant role in improving engagement and improving claims management.
Low engagement, combined with highly price elastic customers, leads to the insurance industry having a customer retention rate of 88% – well below the top performing companies in any industry. Low retention rates and the high cost of new customer acquisition point to a major business challenge. Insurers are turning to insurance telematics to improve their claims process and retain their best customers.
According to a study by J.D. Power, 83% of policyholders who have a positive claims experience will definitely renew their policies, whereas only 10% who had a negative experience would renew. Clearly, an insurer’s ability to ensure a positive experience for their policyholders’ during a claim is critical to the insurer’s ability to retain that customer. Insurers can improve the experience by streamlining the claims process with telematics and providing services that add to safety, security, and peace-of-mind.
Delays in response can be worrying or worse
Safety and peace-of-mind are at the forefront when consumers purchase auto insurance. When policyholders feel safe, they are more satisfied with their insurance and therefore more likely to stay with their insurer. Telematics-driven services such as automated first notice of loss and triggered emergency response give policyholders peace-of-mind.
Advanced telematics services can notify an insurer when an accident occurs and provide information on both the severity of the accident and the location of the vehicle, allowing the insurer to contact the policyholder and dispatch emergency services. Fast accident response could not only save a policyholder’s life, but also significantly reduce bodily injury claims.
Technology can be comforting
These same services are also critical to improving the claims process. Automated first notice of loss (FNOL) allows the insurer to begin the claims process immediately, rather than waiting for the policyholder to file a claim.
Octo collects data from a vehicle’s sensors and onboard computer and reconstructs the crash, providing the insurer with a crash dossier. When integrated with the insurer’s claims system, the dossier helps significantly reduce the time to claim settlement.
Octo’s partners report telematics-enabled FNOL can reduce the time to settle a claim by up to 50%. According to Ernst and Young, insurers realize up to a 40% reduction in claims costs after implementing telematics. Policyholders also realize significant benefits as their barrier to settlement is reduced significantly. Data-driven claims also tend to be more accurate so policyholders may not have to take time off of work to have their car inspected.
A shorter and more accurate claims process will significantly improve customer satisfaction and increase policyholder retention.
This is one of the best win-win opportunities
Telematics-driven claims can significantly improve policyholders’ satisfaction with an insurer’s claims process, providing clear benefits for both insurer and customer. Reduced frequency and severity of accidents, claim settlement time, fraud, and bodily injury claims are just some of the benefits insurers can realize from implementing telematics.
Editor’s Note: John Kramer, Director – Business Development for Octo Telematics North America, will be presenting on 28 February 2017 at the 2017 Insurance-Canada.ca Technology Conference (#ICTC2017) focusing on New Opportunities: Integrating Telematics Data in Claims for Immediate and Future Value.