Insurance telematics: Differentiation is at the core of every value proposition

Insurance telematics: Differentiation is at the core of every value proposition

Harald Trautsch

Octo Telematics launched its first insurance telematics program in 2005, and today we have over one million active clients with more than 60 insurers.
Our primary services are in the areas of security and safety, profiling, and program marketing.
Regarding security and safety, we provide automatic crash notification and kinematics as well as stolen vehicle tracking.
Profiling involves analyzing driver behavior and providing feedback to the customer to help improve driving behavior.
Profiling also helps insurance companies avoid asymmetric risk by ranking drivers regarding real risk factors instead of only generalized sociodemographic data or vehicle specifications.
When it comes to program marketing, we actively help insurers create new communication and selling propositions for their selected channels or needs.
From a marketing perspective, everything we do enables at least one of the following goals: attract more clients, reduce costs, increase retention, and support up-selling of vertical products.

Differentiation, differentiation, differentiation

When talking to insurance companies worldwide, we hear many questions about how to exploit insurance telematics to differentiate firms from their competitors.
This differentiation is at the core of each and every value proposition.
Even though there are some other differences, in most cases the price of car insurance is the most visible element to customers today.
Customers typically don’t expect too much except reasonable service and claims handling from their insurer when needed.
In addition, customer interaction in this business is very low and mostly occurs under non-favorable situations for the client, like when they are invoiced, somebody tries to up-sell another product, or a claim has occurred.
From our perspective, insurance companies are now starting to deliver other value-added services to improve their customer interaction and product pricing.
Telematics is definitely one of the primary tools to help them to achieve these goals.
The growing market penetration and use of social media and ‘always-on’ consumer electronic products are huge factors forcing big companies like insurers to rethink their business models and their ways of communication.
One marketing dollar or euro spent in above-the-line communication today is not delivering the same returns as just two or three years ago.
We are more likely to trust friends and people we know than TV advertisements anyway when selecting a product or service.
In today’s new media environment, it is vital for insurance companies to focus more intently on their client’s needs and adopt their product development, as the increasing speed of life-cycles makes it necessary to accelerate time-to-market and risk trial-and-error approaches.
Telematics applications are a proven vehicle to generate communication with potential and existing clients, differentiate from the competition, drive sales, reduce risk, and improve customer loyalty.
The most important thing is not making products too complicated, but simple and easy to understand.
As the market becomes more mature, other service elements can be added, and products can be expanded to other client channels.
To enable insurance telematics, it is necessary to bring hardware into the customer’s vehicle.
But car manufacturers are already starting to equip their vehicles with telematics units from the factory and allow an infrastructure or service provider to use them for the supply of insurance telematics services.
This practice will become even more prevalent in the coming years as OEMs scale down into their mid- and entry-level lines.
The future for insurance telematics services is bright, and we are curious to see this exciting market become mainstream within the insurance channel.

Harald Trautsch is head of marketing and innovation at Octo Telematics.

For all the latest on insurance telematics, join the industry’s key players at Insurance Telematics Europe 2011 on May 4 and 5 in London.

Leave a comment

Your email address will not be published. Required fields are marked *