Driving Actuarial Innovation with Better Insights
At The Floow, we have identified four key areas of actuarial innovation which allow us to provide a great service to our clients and give them a competitive advantage in their market. These are:
- Better Scores
- Better Insights
- Better Partnerships
- Better Outcomes
In the first of our series of blogs about our Scoring capability, which was published a couple of weeks ago, we focused on the first area of actuarial innovation resulting in Better Scores. We looked at how our core set of contextual and behavioural FloowScores sit right at the heart of our products and are built upon billions of miles of journey data.
The combination of this data has allowed us to develop a scoring platform which is proven to challenge the traditional proxy-based model for assessing risk in an insurance policy. You can find out more about our Better Scores in our previous blog.
Below we look at the next key area of actuarial innovation, Better Insights, and the insights our scoring platform can provide to our clients and their policyholders.
The claims experience allows our clients to differentiate between the risk presented by their telematics and non-telematics books, whilst the data derived from telematics coupled with the strongly predictive set of scores that we have developed provides client actuaries with powerful new capabilities to price policies and inform their understanding of the true risk.
With telematics, the traditional factors associated with the vehicle, age, postcode, profession and claims history are no longer the only indicators as this technology introduces a new set of policyholder scores based upon an understanding of the true picture of a driver’s behaviour.
At The Floow, evidence suggests customers are reporting 15% fewer claims on the telematics book than would be expected on the same mix of non-telematics policies with the average claims cost being 10% lower, a 20%+ increased retention rate and up to 4x improved conversion as well as the ability to sell safely into otherwise riskier segments.
As if these benefits weren’t enough, telematics data provides the opportunity to do two things:
- Create attractive retention pricing strategies for the best risk (because keeping current customers is far less costly than attracting new ones)
- Develop new strategies to engage those whose driving behaviour could use some improvement
We have a number of tried and tested approaches to engage drivers and help them focus on making improvements to their driving. One such approach involves integrating rewards programmes into telematics insurance propositions. Our rewards schemes are proven to improve driver scores by as much as 54% over as little as a 1000 mile period, and have a bigger behavioural impact than just offering an insurance discount at the end of the year – especially for low-scoring drivers.
We work with insurers to understand the behavioural outcomes they are looking to achieve before recommending a rewards solution which is tailored to their customer demographics.
For drivers who require further improvement, there is our FloowCoach programme where we make use of social science techniques to help improve driver behaviour. FloowCoach is pioneering in its approach, targeting drivers with the lowest scores and riskiest driving behaviour and inviting them to participate in a programme of telephone-based conversations with highly trained behavioural coaches.
Through a series of phone conversations, we help drivers focus on specific ways to improve their overall score and drive more safely. Our latest research shows for every 100 people in the lowest-scoring decile who have completed the FloowCoach programme, 13 accidents are avoided compared to standard feedback mechanisms.
Based on the correlation between scores and claims frequency, we project an overall 18% reduction in claims compared with the control group. This means that for every 1,000 drivers participating in the programme, we are preventing 31 accidents from taking place.
Our highly predictive scores help our clients to truly understand the driving behaviours of their policyholders so they can create attractive retention pricing strategies and develop strategies which help drivers to engage with their behaviour behind the wheel and make improvements, through rewards programmes and driver coaching.
All of this allows insurers to create a truly differentiated and engaging proposition for their policyholders by making use of the insights that can be collected from the use of telematics for insurance purposes.
In our next instalment, we will look at how working in partnership with our clients allows them to develop truly unique scores and the competitive advantage and IP ownership that goes along with these.
To read more about our approach to scoring, check out our latest issue of Driven magazine which features a further article on this topic. To find out more about our scoring and the insights it can offer to your business and policyholders, get in touch or request a demo at firstname.lastname@example.org