Three questions to ask as you rebuild your telematics auto insurance solutions

Telematics auto insurance solutions have been embraced by the top insurance companies, and it’s clear why. Telematics programs allow auto insurers to tap into driving insights that help them better understand their customers’ risk levels. In turn, carriers can price all types of drivers more accurately, leading to loss ratio improvements.

But too often, auto insurance companies invest in telematics programs that don’t perform as expected. Without the right partner, telematics success can be limited by inaccurate scoring models and inadequate tools.

If you’re looking to optimize your existing telematics program, there are three questions you should ask to ensure your partner can help improve telematics engagement, adoption, and profitability:

Question 1: Does the scoring model achieve the highest possible accuracy for auto insurers? 

Without the right driving data or scoring model, you risk incorrectly scoring customers, causing you to underprice bad drivers and overprice good ones. As a result, you risk negatively impacting your customers — or not realizing potential retention and loss ratio improvements.

To make sure your program prioritizes accuracy, look for telematics auto insurance solutions that include:

• Scoring models that account for traditional rating variables: Driving behaviors need to be correlated with traditional elements of your rating plan for the highest level of accuracy. Arity driving scores avoid double-counting risk factors so insurers don’t have to rely solely on actuarial judgment. The result? Driving behaviors in our score receive appropriate weights, providing the best starting point for true indicated factors while giving your customers the accurate scores they deserve.

• Insights derived from datasets tied to actual claims: Building telematics auto insurance solutions with the highest level of accuracy requires hundreds of thousands of earned exposures and distinct claims. Because this data takes years to collect, many insurers’ programs lack the volume they need to build their own accurate program. Meanwhile, our driving score is built on the world’s largest dataset tied to actual claims data, allowing us to build a highly accurate risk model that fits into your existing pricing structure.

Question 2: Will your telematics partner help you through the adoption process?

Even if you’ve built the foundation of a successful telematics model, you need internal and customer buy-in to realize short- and long-term benefits.

However, it can be challenging to educate customers on the benefits of a telematics program — especially at a time when many are still wary of sharing data. That’s why successful telematics auto insurance solutions require a partner that empowers you to engage and educate agents and customers, helping you drive wide-scale adoption.

To streamline program adoption and leverage telematics data on a larger percentage of your book of business, look for a partner that provides:

• Tools and resources to help you gain buy-in from internal stakeholders: The first step in enrolling customers into your program is educating agents and teaching them how telematics benefit their customers. Arity helps you engage your agency force, end users, and stakeholders from the get-go, providing tools and best practices to help you optimize program design, distribution, enrollment, and onboarding.

• Access to telematics data at time of quote: While some consumers prefer the engagement level of a traditional telematics program, others want to be priced using their driving data in a more seamless, less intrusive way. Historically, telematics-based pricing is delayed until after a customer joins a program and logs a certain number of trips. But this slows onboarding by preventing auto insurance customers from receiving an accurate price upfront. Rather, most customers enrolled in traditional auto insurance telematics programs receive a participation discount, regardless of their driving behaviors. Using Arity IQ, you can instantly query and incorporate the actual driving risk of a customer at the time of quote. As a result, you create frictionless telematics program adoption processes and can price more consumers from the get-go with actual driving behavior and mileage data.

Question 3: Does the telematics program prioritize data security?

Data security is on everyone’s minds. And with such an immense amount of driving data needed for an accurate program, telematics auto insurance solutions are innately susceptible to security breaches and non-compliance penalties.

To make sure telematics auto insurance solutions are secure, you need a telematics partner that treats security as a fundamental element, not an afterthought. Arity cleanses, de-duplicates, and stores data in the cloud to maintain global privacy, security, and governance regulations — for your customers’ sakes and your own.

Auto insurers, revamp your telematics program with Arity

When you work with Arity, you gain access to a partner with the data, tools, and expert analysis you need to upgrade your telematics program. With our help, you can leverage driving data to outpace auto insurance competitors, retain valuable auto insurance customers, and boost profitability.