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Telematics: How Data is Driving Opportunity
Debbie Coull-Cicchini Executive VP Ontario, Western & Atlantic Canada Intact Insurance
The opportunities that telematics and usage-based insurance (UBI) present for the insurance industry, brokers and customers alike cannot be ignored. The global UBI market is accelerating at a rapid pace—according to Global Market Insights, it’s expected to grow to over US$107 billion by 2024.
UBI programs collect vehicle telematics data from cellular, GPS or other technology. Most programs measure speeding, acceleration, harsh braking and distracted driving. They often provide feedback on driving behaviour, tips on how to improve and a discount based on good habits.
At Intact, telematics is our biggest data creator. For the past four years we’ve been proactively building our UBI program my Drive™ which enables customers to monitor their driving behaviour. With individual tips and feedback, drivers can earn personalized discounts of up to 25%, updated every six months based on safe driving habits.
Through the collection of data and by leveraging Artificial Intelligence, insurers have the opportunity to develop more sophisticated segmentation and pricing. This helps us offer customized products and provide a positive and more personalized customer experience, which in turn strengthens the broker-customer relationship through tailored, expert advice and education. With telematics, brokers can better advise their customers on how they can improve their driving and increase their discount, which in turn will help increase customer satisfaction.
Drivers change their behaviour when they feel they’re being assessed. We’ve also discovered that learning how to be a safer driver is attractive to Canadians.
Our experience shows that UBI is more powerful than any other variable used today, allowing good drivers to earn a significant discount compared to drivers with poor driving habits. Good drivers are more likely to stay in a UBI program, while drivers with poor driving habits who don’t earn a discount may choose to shop around, adding segmentation value to a broker’s book of business. Building retention also reduces pressure to generate new business.
The interest in UBI among consumers is growing globally. In 2019, 35% were interested in UBI, which grew to 51% in 2020. Customers are also embracing digital tools including UBI like never before. According to McKinsey, digital adoption has grown during the pandemic, even among the most digitally resistant customers, and changes in consumer preferences are expected to outlast the crisis.
Now more than ever, customers are looking for more for their money. The 2020 World Insurance Report revealed that 51% of consumers want UBI because it offers hyper-personalization and value. By providing feedback on driving habits, UBI gives drivers control over a personalized discount and can be especially attractive for low-mileage customers and those who drive safely.
We’ve seen with the popularity of programs like Waze and Google Maps that consumers are willing to share their data for something they deem valuable in return.
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