Marketing telematics more than just discounts, say experts

Telematics is just now spreading across Canada – but one expert says insurers should look beyond just offering discounts to attract and hold on to clients.

Motor & Fleet

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Telematics is just now spreading across Canada – but one expert says insurers should look beyond just offering discounts to attract and hold on to clients.

“At the moment, Canadian insurers are luring consumers with the promise of discounts, but this will not keep their attention for long,” says Jack Palmer, project director with Telematics Update, the organizer of the upcoming Insurance Telematics Canada 2014 conference on May 28-29. “To be sustainable, programmes must be designed to build and retain a loyal customer base.”

The Toronto, Ont. conference and exhibition is taking a look at what is already working in other markets – particularly south of the border, where telematics has been marketed by the insurance industry for upwards of three years.

According to Palmer, “the challenge here is to determine a specific strategy and model that is in sync with wider company aims and goals insurers and telematics service providers need to make UBI (Usage Based Insurance) an enterprise-wide venture.”

And from the American perspective, telematics marketing requires more finesse than a simple saving on premium.

“The product is a lot more complex than maybe people had conceived in the beginning when thought about simply as a price discount,” says Joe Reifel, a partner, with A.T. Kearney (Americas), told delegates at a recent telematics conference in the United States. “There is a view that insurers need to think a lot more about how this offering fits with their long-term strategy, so the time it takes to reflect on that, to think about the customer experience, and the nature of that experience, those factors begin to stretch out the time frame.” (continued.)
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What’s more, the tentativeness that characterized last year’s attitudes towards the technology has largely gone, replaced by commitment to commercial launches by as many as 13 of North America’s top 15 UBI insurers, according to Raymond Alvarado, enterprise account executive with Intelligent Mechatronic Systems (IMS).

“The hesitancy is no longer there,” he says. “Now the biggest push is to figure out how to increase adoption rates.”

Those adoption rates are still fairly low, as about 2 per cent in terms of overall auto insurance market penetration, according to research done by A.T. Kearney.

But that is expected to change quickly.

Already, insurers with over 60 per cent of market share are in multiple states with a UBI product. And Progressive is the first insurer taking a UBI advertising campaign national. This makes UBI “no longer just an innovation,” says Shamik Lala, principal of financial services and strategy with A.T. Kearney. “It’s a boardroom conversation. It’s (people]) are concerned what happens… when you are left with the basket where everybody else has self-selected out to somebody who offers a UBI product.”

 

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