Day Two: Connected Car Insurance USA 2018

Is customer experience the key to insurance success? Susan Kuchinskas reports.

The second day of the Chicago conference had a strong focus on consumer experience, that somewhat elusive concept that is the mantra of most consumer brands. In fact, the more insurance carriers think like other consumer brands, the more successful their usage-based insurance apps may be, according to Katie DeGraaf, director of product, insurance solutions, at Arity.

When it comes to changing behavior such as distracted driving, she said, “You have to communicate to consumers in a way that’s understandable and compelling so they will be motivated to change,” she said.  She added that one size does not fit all. Insurers need to build multiple features that focus on different customer segments. For example, the top 10% of drivers may love a leaderboard but it can discourage the lower-ranking drivers, who need a different approach. Craft messaging carefully, DeGraff advised, adding: “A small change can make big impact.”

Social media points to what consumers like and dislike about today’s UBI programs, according to social media sentiment analysis presented by Roosevelt Mosley, principal and consulting actuary with Pinnacle Actuarial Resources. Analyzing consumer sentiment about the top four traditional carriers and their UBI programs, consumers were most positive about the savings they got. Mosley said savings of $50 to $100 were significant to most consumers. The most dissatisfaction came from driving scores – people usually think they’re better drivers than they actually are.

Finding the right mobile strategy

Thomas Hallauer, research and marketing director of Ptolemus Consulting, estimated that there are around 15M active users of some sort of mobile insurance app, a number he called insignificant. Active users are a key metric of success for a mobile insurance program.

The basic functionality of communicating with the insurer is just a start, Hallauer said. “Next, it’s about keeping them using the app.” He suggested proving cross-line functionality, roadside assistance and added services that could be as simple as a dictionary, weather or gas prices.

Kassie Bryan, senior vice-president and head of solutions, P&C Americas, for Swiss Re, pointed out that apps can change the way people interact with insurance, moving it beyond the negative experiences of paying and filing claims. “By having additional touch-points, you are able to change the relationship to something more positive. It’s important to find the right value for those touch-points,” she said.

More data for more stuff

Many companies attending and speaking at the conference aim to provide more data of different kinds from different sources to power different analyses or services. Ted Gramer, CEO of TrueMotion, outlined novel insights that can be derived from today’s mobile phones. For example, the magnetometer can detect whether the turn signal or windshield wipers are on, as well as whether someone is in a car or on a bus. The accelerometer can determine the length of a vehicle by how long it takes all four wheels to travel over a bump. “Layer in more and more signals, and all of a sudden, you have a fairly predictive picture,” he said.

Understanding the greater context in which someone makes movements or drives is important for accurately identifying distraction, according to Hari Balakrishnan, co-founder and CTO, Cambridge Mobile Telematics. All hard braking isn’t the same. For example, if a pedestrian darts out into the street, hard braking shows the driver was paying attention. That’s why understanding context is so important.

Dan Viza, senior director of global business development and strategy for Trillium Secure, noted that there is a cyber-security risk to insurance telematics. He said that the fundamental data integrity is at risk of compromise. “The risk is more than to the business opportunity for the insurance industry,” he said. “It’s fundamental to our ability to transform this industry.” That’s because insurers need to be sure that the data they use for business decisions has integrity, from understanding risk and pricing policies to value-added services like predictive maintenance and driver training.

Automation from FNOL to resolution

Many vendors touted automating the claims process from first notice of loss through resolution. Computer vision and machine learning can quickly assess damage and even make a cost estimate. Many fields of the claim report can be repopulated, saving consumers and adjusters time and data could determine whether to send an ambulance or a tow truck, whether the car was totaled, and even who was likely at fault.

Cambridge Mobile Telematics aims to use dashboard cameras combined with video analytics to add new contextual factors to insurers’ risk assessments. “Video analysis can enhance context and the understanding of what events mean, thanks to machine learning,” Balakrishnan said.

It can also be used to automate claims, aiding in crash reconstruction and providing decision support for claims automation.

One question: Do we know that customers actually want their insurer to reach out after a crash? David Bliss, vice-president of product management at CCC, pointed out that its program of automatic crash notification and proactive reaching out to customers went live in Texas with State Auto this year. “It was clear that customers really appreciated it,” he said. One key point: Filing a claim must be made optional, he said. “You can’t force them to make a claim. Make sure they know they can take care of it themselves.”

Clint Marlow, director of claims for Allstate Insurance, acknowledged that his company is, “Learning in flight. It’s a hypothesis that needs to be proven,” he said. While Allstate doesn’t yet have a data set showing customer desire for proactive contact in a crash, he said the company does have the means to begin to understand that.

Insuring mobility and autonomy

Different modes require a new look at traditional insurance. For example, car-sharing services may be used by young people who don’t have personal car insurance policies, nor a lot of driving history. Truro has found new ways of evaluating driver risk; for example, people who book in advance are less risky than those who request a car within a few hours. “Mobile is where carriers have to move,” said Adam Fischer, vice-president of product at Clearcover. “It’s a more customer-centric approach. When we get to autonomous, you can speak to a user through a personal device.”

A mobile policy that sticks to the customer, not the vehicle, is a good answer in the world of autonomy, according to Cletus Nunes, director of sales for Octo Telematics North America, who added that insurance companies will still have a role then. If someone is involved in an accident while traveling in an autonomous car, Nunes said, he’ll want the insurance company to take on the automaker.

Build the muscle now

Meme alert: several speakers advised insurers to start “building the muscle now.” They referred to building the capacity to use data to prepare for a world in which an exploding amount of data from multiple sources, possibly brokered by exchanges, will enable automated claims management, better ratings and pricing, and lovable consumer services. Jason Verlen, senior vice-president of product management at CCC, envisioned how telematics will transform insurance by 2028, based on the technologies and innovations carriers are beginning to embrace today.

A panel of investors moderated by Scott McCormick, president of the Connected Vehicle Trade Association, gave a precise menu of what they look for in start-ups and data was the key. Haley Smith, director of State Auto Labs, said: “If you can ingest data, video and images from many sources and make sense of it, that is what we need.” Paul Asel, managing partner in NGP Capital, is looking at companies that take unique data sources, integrate them in innovative ways and then make it available.

Alex Horvitz, CEO of HCS Capital, looks for an addressable market; a value proposition that is simple and disruptive; and the ability to grow fast, at least 5% per month. Insurers are hungry for help in acquiring and using data. The clear message from the conference is, it may be a steep learning curve but the payoff is potentially huge.

Now catch up with the news from Day One.

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