The need for auto insurers to offer a usage-based insurance (UBI) program is well known. According to the Ptolemus Consulting Group, companies that implement a UBI program experience a five percent reduction in average loss ratios. It is no wonder that most of the leading US insurers already have, or are actively piloting, a program.
The need for a UBI program is obvious but that doesn’t mean it’s always easy. In our work helping insurers to implement UBI, we often hear about the internal barriers they face when building a program. The most challenging of these barriers are program cost, program profitability, and integration.
Integrating telematics into your organization
Once you’ve done your research, convinced the right people, and decided to develop a usage-based insurance program, what do you do next? The value of a usage-based insurance program is pretty clear, but now you need to deliver on those promises.
A major new product, like UBI, will affect your entire organization. It is therefore imperative that you not only have leadership support, but also buy-in from critical stakeholders such as marketing, sales, underwriting, pricing, services, and claims. Each of these departments will have a part to play in the program’s success. A few critical tips for building this support include:
- ‘Market’ the program internally to each stakeholder group (for instance, talking with the claims department about how telematics can be leveraged to improve efficiency in the claims process)
- Leverage leadership support
- Set and communicate realistic expectations
- If you’re working with a telematics service provider, make sure they have proven implementation experience and can support you throughout the process
The next step in ensuring program success is integration. The data available through telematics can be really powerful and should be leveraged across your organization. Driver data can be used to create efficiencies in the claims process, inform marketing, improve risk models, and enhance customer service. A best-in-class insurer will leverage UBI program and telematics data to enhance all aspects of operations.
Finally, customer engagement is critical to UBI program success. The best-designed program in the world adds no value if customers are not opting-in. It’s imperative, then, that you design your UBI program to maximize customer acceptance. This includes preparing your sales and marketing teams to highlight the values of participation and to sell the product effectively.