Boost to brokers’ commercial offerings

Boost to brokers’ commercial offerings | Insurance Business

Boost to brokers’ commercial offerings

An industry expert has said it is only a matter of time before an insurer launches a telematics offering in Australia, opening the door for brokers to boost their commercial offerings.

Warrick Gard, insurance partner at Ernst & Young Australia said there were companies already assessing the market for telematics – using technology to monitor driving behaviour – in the country.

In a recent interview, IAG Direct Insurance CEO Andy Cornish told reporters that its insurance brand NRMA had considered providing a telematics offering but found there wasn’t the market for it.

A similar situation occurred in the UK, when insurance giant Aviva became the first insurer to launch a telematics product in 2006. The pay-as-you-drive insurance scheme was shelved two years later due to lack of demand. However, last year it launched a telematics smartphone application, adamant that there was sufficient demand and that the original product was ahead of its time.

Gard told Insurance Business: “It is only a matter of time before an insurance company brings out a telematics product in Australia. Once that happens, we will be able to gage the level of interest.”

Asked what role the broker can play in telematics-based insurance, he said that intermediaries with a commercial fleet offering stand to gain.

“I can see a broker partnering up with an insurer around telematics, offering a commercial fleet product and possibly being involved in its delivery to the customer, making it clear that the product could bring down the cost of their policy. Brokers help their clients with risk management and this would be another mechanism in which to do this.”

He also suggested that brokers could share in the production process. “Perhaps the insurer and broker will focus on specific parts of the product but maybe the insurer will be able to do it all.”

“It all depends on what the broker can bring to the table that adds value to the insurer’s offering,” he added.

Other experts suggest brokers will play a greater part in delivering telematics products to the insured.

Peter Tugby, CEO of insurance software house, 3CA, said: “Telematics should be welcomed open-armed by brokers. It gives them with tools to add value to wary but interested customers in an emerging market.  The biggest role brokers will take will be getting telematics devices into the marketplace.

“The brokers who take on that role now can be in a position to really take advantage when the market really opens over the next three to five years.”

Tugby suggested telematics had been slow to catch on in Australia because consumers fear the invasion of their privacy.

“The adoption of it in insurance has been slower than expected. This may be down to customers initial apprehension over 'big brother' data but the way the market operates is lending itself to change.”

“The movement towards aggregator sites and the professional consumer means customers are becoming more informed of what's behind premium ratings,” he added. “They will demand usage-based insurance and it’s down to carriers to embrace the rating transparency.”