UBI could be just one element of an insurer’s customer offering

Just as telematics has evolved in the past decade or so, insurers will have to tear up their business models to compete in the connect car market.

That’s the opinion of Indro Mukerjee, CEO of the Watchstone Group, parent company of the telematics specialist Hubio, who says insurance providers must look beyond their business models focused only on UBI revenue streams.

Speaking to TU-Automotive, Mukerjee said: “Whenever I hear the word telematics it gives me a wry smile because I spent 8-9 years with Philips including its automotive business and was around when telematics was the new buzz word and no-one really knew what it meant.

“It’s a term that has been misused quite a lot over the years because the telematics part of this is really the fairly straight forward technology that has been proven to work and is quite mainstream in this field. However, what everyone is looking for is the value proposition within the consumer paradigm.

“What we have seen is that UBI is a niche-at-a-time business development route. It has become established with the young driver and now, as we have discovered with discussion with other companies and customers, there are measures taking place to consider UBI solutions for other vertical market areas. For example senior citizens, particular high-risk driver groups, etc., and I think UBI will expand organically with the model it has been using.”

Mukerjee said insurers have to begin looking at customers not just as policy-holders but as potential consumers in a broader sense.

He explained: “The transformation of telematics will come, I think, when the insurance part become just one of the elements because while insurance is the only element it will go along at the speed it has been already. Telematics is, ultimately, a consumer engagement tool and once you consider the market as a broader consumer engagement paradigm then you start to see opportunities and value chains way beyond those we’ve been looking at so far.

“To engage with people and to be part of their lives, the behaviour and their money spending activities and their enjoyment is a valuable thing and then the technology starts to come into its own.

“I don’t think this is really a technology issue rather than a market philosophy issue to be involved with consumer engagement. I would stop using words like telematics, I would stop labelling this as being about UBI, I would use the broader vision of this being about consumer engagement.

“Because, whether you’re an insurance company or a bank or a retailer, the same principals apply. We’ve got caught up in the intersection between insurance and automotive and I see this issue as being much more than just that because it goes beyond those two areas. The one thing that links them is the mobile phone and us as the consumers and as soon as you can achieve that then the whole game changes completely.”

While the extra revenue streams can be seen as an attractive carrot for insurers, there’s also a big stick in the shape of outside competitors that could enter the UBI market.

“Already there are plenty of ‘other’ companies that have come into the insurance market and that is not going to stop and it can only increase,” said Mukerjee. “The reason for that is these other companies, who do not have a background in the insurance market, can see their consumers can benefit from new services. So, if insurers see their customers being attacked in this way they have to start working out what they can do to respond and go into new business areas themselves.

“They have to A. start to seeing their customers as consumers and B. start develop from those engagements other services, perhaps offering partnerships by affiliating with other companies but, ultimately, that is how the market will go.”

Mukerjee agreed that connected vehicle services could, eventually, be packaged together with life-style solutions including the car, home and medical cover just as a beginning to broaden the insurers’ offerings.

He said: “The technology is there to enable that already because these are not just dreams that people think will be a long way off. These are things where the industry should be told this is not sci-fi this is down to marketing and consumer engagement because all the technology is there already.”

While carmakers are bound to feature in this more competitive landscape, Mukerjee believes the real challenge to insurance companies will come from the retail sector.

He explained: “But I see this more broadly and this is now a battleground for the insurers and retailers fighting for the same consumer but from different angles. The insurance industry has to face the fact that for a long time it has been a stigma purchase, where people do not have a positive affinity towards it and so we have seen companies trying to rebrand themselves who are reinvent themselves to grab hold of younger consumers to take away the negative perceptions of the past.

“The offering of rewards for good driving behaviour is positive and secondly the annual touch-point should be a thing of the past with technology able to allow frequent customer engagement just as the mobile phone engages on a daily basis.

“I would go beyond the one-niche-at-a-time UBI and make an app based consumer engagement via the phone then using smart data analytics to clean up and enhance the data that you get onto the phone. That’s something that I believe if you have the data science the analytics can achieve that.

“The other direction is to link with other industries like retail, affinity groups and rewards and I would do this quite quickly because we need to do this.”

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