Has Telematics reached the promised Tipping point?
Recent surveys have shown that the majority of people are open to telematics products if they deliver a suitable form of benefit to the customer in the form of discounts, rewards or other services.
Normally I agree with Steven D. Levitt and would say:
‘Don’t listen to what people say; watch what they do’.
However, in this case behaviours are backing up the surveys and many insurers including Progressive and many other Floow clients are stating (or implying) that around 50% of their new policies are now incepting on a telematically enabled basis. Further evidence, if it were needed, comes from confused.com who in July ‘23 quoted a market penetration figure of 26% of all UK policies now being UBI related, although this is still biased towards younger drivers.
Much of this increase has been delivered though the move from box-based policies, with their associated costs and fitting challenges, to smartphone led technology but there has always been a fear that customers will not continue to use mobile phone-based Apps in the same way that they will record trips on a fitted device.
Recent analysis by The Floow suggests that this fear may be unfounded.
Having reviewed various portfolios around the world we have found that, when best practice is adopted, the continuity of trip recording can be just as good with an App based policy as with a box-based solution.
However, this is not always the case and if you fail to engage with your customers (or don’t offer them solutions that they want to use) then you could lose 40% or more of your initial customers over the first month alone.
This engagement is vital as without this, although you may still benefit from any self-selection benefit, disengaged users who are no longer using the App will not provide any additional benefit through the Hawthorne (big-brother) effect or provide the ability to educate drivers to be safer and should an accident happen there will be no benefit from the telematics data for crash reconstruction and liability discussions.
Nonetheless, the narrative doesn’t conclude here, as the top of the funnel holds equal significance.
With box-based policies there was always a challenge at the very top of the funnel. Getting the devices shipped and ensuring that the customer fitted them correctly could result in up to 70% of customers who had paid for a telematics policy never recording a journey.
This top part of the funnel can be especially important since our findings indicate that a large proportion of the customers who never recorded a journey never really wanted to. They merely bought the telematics policy because it was cheap and when/if they are challenged about the lack of data emanating from their vehicle, they will cancel the policy and move elsewhere. In the meantime, they are posing a significant anti-selection risk and performing, on a Loss ratio basis, some 20 points or more worse than you might expect.
With an App based policy there are no ‘fitment’ issues but the customer does have to download an App, register it and ensure that all the necessary location, motion and battery saving permissions are set correctly. This can be confusing for some customers so having the right messaging system is key to success.
At the Floow we are actively helping our clients to understand all facets of their customer journey and providing the analytics and tools to ensure that the customers successfully navigate the funnel and can therefore generate maximum return on investment for the insurer as well as safer roads for everyone.
Floow Campaigns is the latest tool in our arsenal allowing us to collect relevant data throughout the policy lifecycle and use this to create hyper-personalised campaigns targeting individuals or groups of individuals to actively engage with them through their preferred channels. This tool can be successfully used in all areas of the funnel from prompting customers to download the App and guiding them through the registration process to journey chase messaging, or congratulatory messages for good scores or rewards earned.
If you would like more information on how we can help you maximise your customer engagement through active management of the policy lifecycle, then please contact us:
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