Telematics technology is a “total game changer” for the future of the auto insurance industry. Those are the words of Gina Minick, director of product at Arity, a mobility data and analytics company that helps insurance companies leverage telematics data to drive business value and transform the customer experience.
Insurers have come on leaps and bounds with their use of telematics technology in the past 10 years, but there’s still a long way to go, according to Minick. When telematics solutions first came to market, simple on-board diagnostic (OBD) systems were used to monitor the driving movements of vehicles, capturing data such as location, speed, mileage driven and braking. Some insurers would then use that data to offer “good driving” discounts on top of existing rating plans.
Over time, as mobile data collection capabilities have improved, insurers have gained better insights, leading to “deeper connections with consumers”. This has enabled insurers to create more bespoke insurance products and to leverage telematics data for targeted marketing campaigns.
“Imagine being able to connect with the consumer by using predictive analytics to understand things like shopping intent or lifetime value – just by using their driving data,” said Minick, at a recent Reuters Future of Insurance event. “We’re seeing some really positive traction with mobile apps embedding [telematics] technology to collect driving data and offer [added] value through those experiences as well. This also allows users to opt in to get things like insurance offers.”
Arity, which was founded by Allstate in 2016, is taking telematics data collection to the next level. Beyond using the data collected for proactive marketing, the mobility data and analytics company wants to be able to offer a telematics-triggered driving score at the time of quote. This ability to lean into telematics data to price auto insurance from day one is, according to Minick, “a long overdue shift” that insurers have been waiting for.
“We all know that telematics data is valuable, but it’s really hard for insurance companies to get to it. Historically, we’ve had a lot more demand than we’ve had supply. Plus, it takes time from collecting that data to actually know what price those consumers should pay,” said Minick. “We also know that no-one really shares the data if they do collect it. Even though that data does exist out there, if you’re the insurance company offering your program, you’re the only one who’s collecting that driving behaviour if you insure the customer. So, it’s really hard to find the safest drivers out there to really give them low prices that they truly deserve.
“This is where partnerships with [OEMs] and companies [that manage mobile apps] really start to matter and come into play. We can leverage apps that collect data that’s already out there, and we can learn about driving behaviour before a consumer even starts shopping for auto insurance. App experiences like these can really create that supply and ultimately meet the demand to get insurance companies access to the data, which then gives customers access to insurance based on how they actually drive.”
Offering telematics insights at the point of quote will enable insurers to offer consumers the best possible product, and help them to meet increasingly high consumer expectations around the buying process in insurance.
“For safe drivers, that means you can offer a more competitive rate or even offer them more incentives to bind and retain because we know that they’re going to be valuable customers,” Minick added. “And it really opens a door for us. When we have this telematics data at scale for new business, that can help us bring telematics to the forefront of our rating plans.”