In the motor vehicle insurance industry, telematics tariffs are currently an answer to the question of digital innovations: Dynamic driving data from customers is collected using smartphones, subsequently installed hardware or by the manufacturer’s own electronics and used as additional parameters for calculating the individual insurance premium.
The insurer usually communicates with the customer using a smartphone app, for example to display the current risk score and other additional information.
A look at other countries shows that this model basically works. Internationally, behavior-based tariffs for young drivers in Great Britain and kilometer-based tariffs in Italy and the USA are successful in terms of sales volume. However, there is general agreement in the industry that, with a few exceptions, telematics tariffs have not yet been established across the board. Why is that? And what is required for the big breakthrough?
Telematics tariffs are currently used by many market participants as a customer loyalty tool with a focus on premium discounts through safe driving. The use of driving behavior-dependent parameters such as braking, acceleration or speeding to determine a risk-based premium is an important first step. In the future, further expansion stages of these dynamic risk assessment models will be developed, for example to take into account the use and intervention of driver assistance systems such as the parking or emergency brake assistant.
dr Claudius Leibfritz is CEO of Allianz Automotive. The automotive business of Allianz Partners is bundled under the brand.
With the help of telematics, other core elements of motor vehicle insurance are to be improved and rethought in addition to tariffing. This includes, among other things, the conclusion and claims process. When taking out insurance, customers today have to submit their tariff characteristics to the insurer themselves in a more or less complex process. With the help of a data-based “Fast Quote” process, this information could in future be automatically retrieved from various sources – such as the vehicle – in order to simplify the application process.
In addition, the customer should be able to easily and flexibly take out additional coverage, such as expanding the group of drivers or foreign damage protection, as an “on-demand” service. Among other things, these on-demand services can then also be provided via the vehicle’s infotainment system. The product must convince with simplicity and the customer experience with speed, because customers expect no less from an insurer in terms of service excellence than they do from Amazon
The same applies to the settlement of a claim. Here the customer should be able to choose whether they want to report this by phone, app or website. In the future, vehicles will be able to recognize an accident independently and report it to the insurance company, including the necessary vehicle data. With the further development of image recognition and artificial intelligence, processing will even take place completely automatically, making it even easier and faster for customers. Allianz already offers car manufacturers EU-compliant eCall (emergency calls) and bCall (breakdown calls) solutions that use vehicle data to better assess the situation and thus provide targeted and proactive assistance.
Dovetailing these service offerings with motor vehicle insurance products will be crucial in order to create a unique selling point in the competition and to offer customers real added value. Because insurance can and must be more than just coverage and a price.
Automobile manufacturers are pursuing a parallel strategy: in the future, the focus will no longer solely be on selling the vehicle, but rather on providing mobility and mobility-related services. One example is connectivity services that warn customers about traffic jams on the way to work, show them the next available parking space, or arrange a service appointment if necessary. In addition to the manufacturer’s own services, the integration of the third-party solutions will be crucial to create an ecosystem with a competitive advantage.
Today’s customers expect a variety of offers that cannot be fully covered by one company alone. B2B2C service providers therefore offer manufacturers integrated insurance and service solutions to complement the spectrum of their respective ecosystems. For example, we enable manufacturers and mobility service providers to integrate the breakdown service directly into their respective smartphone app. The customer can use their smartphone to share their location, set up a voice connection and see on a map where the tow truck is and when it will arrive. The focus here is not only on towing the vehicle, but above all on the customer and maintaining their mobility, for example by providing suitable replacement mobility.
The integration of third-party services poses a technical as well as a commercial challenge. In particular for user data, which is fundamentally attributable to the customer, it must be clarified how these can be provided with regard to access and usage rights for free competition of innovative services. Successful digital ecosystems such as the Apple App Store show that the success of ecosystem participants can be achieved primarily through an open, flexible system with sustainable customer benefits and customer loyalty.
In summary, it can be said that telematics insurance represents an important starting point in the digitization of insurance solutions and has the potential to act as the basis for a sustainable trend that will increasingly replace traditional insurance offers with integrated insurance and service products. The topic of tariffing based on individual driving data is far from over, but telematics offers should offer customers more than just an attractive price.
Improving the value proposition and thus the customer experience of insurance along all “customer touchpoints” will be the key to success. In addition to classic insurance in the event of damage, there is a promise of convenience in everyday life. Successful cooperation with ecosystem partners such as car manufacturers is also another important factor in taking the product to the next level.
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