Three ways a continuous customer connection helps insurance companies thrive

How can the insurance industry leverage a continuously connected customer base to create relevant experiences? We asked insurance industry...

Connecting with Insurance Customers: A New Opportunity

Until just recently, in all of insurance history, customers didn’t talk to insurance carriers unless something was wrong: their premium increased, or a claim was submitted.

That’s not much of a connection. But today, insurance companies have an opportunity to develop a stronger bond with their customers, to build loyalty, to encourage word-of-mouth, and to create more positive ongoing experiences. All through what we call a “continuous connection.”

The opportunity of a continuous connection, where the insurance company is always connected to their insureds, exists through telematics programs that leverage consumers’ smartphones.

Establishing a connected customer base is a win-win for the insurance carrier and the consumer. Specifically, with a continuous connection, insurance carriers can:

  • Collect more data (a lot more data) to validate rating models and provide more meaningful policies and accurate discounts,
  • Create opportunities to interact with and support the consumer during positive life moments, not just bad ones, and
  • Offer more value-add services, such as pointing out hazardous intersections and ways to go around them, showing them re-routing on heavy traffic, offering feedback on how they are driving, and more safety tips regarding behaviors we know often cause accidents.

If this sounds too expensive or difficult to set up for your insurance company, here are a few ways the cost of a telematics program might be completely offset by the resulting benefits.

  1. Validate Rating Models and Provide More Meaningful Policies and Accurate Discounts

Not only may a continuous connection with an insurance customer help make the roads safer, it’s a good business, too. With this connected customer data, you can validate rating models and offer more competitive discounts.

Think about all the drivers who leverage multi-modal transportation options. When you know the multiple means by which insureds use transportation, you can more accurately assess the overall risk of the insured’s transportation and recommend appropriate risk control products.

When auto insurance companies monitor multiple policy terms (and have increased data collection overall), they establish a more consistent connection. A continuous connection is a huge advancement over the traditional single term “collect and discount forever” model. This is a competitive world where a powerful multivariate model with telematics data will greatly improve accuracy. But to establish accurate models, we need a significant amount of data connected to actual losses.

When you know more about your customer from the start, it’s easier to provide a meaningful policy, data that inspire safer behaviors, and discounts where and when it’s most appropriate.

  1. Create Positive Moments to Interact with Your Insurers

At some point, most insurance companies will connect a telematics program with every customer at the point of acquisition. That connection might be with a customer who is 16 years old and has a new car, 26 and experiencing a life change like marriage or new baby, or 36 and shopping for better financial deals.

Imagine having a continuous connection from that point forward, through the lifecycle of a driver. By building connected customer relationships early on, you’ll have many opportunities to interact with that customer and support those life moments in positive ways.

An Evolved and Evolving View of Driving Behavior Data

A continuous connection with your insureds over time not only offers a historical snapshot of their driving behaviors and other vehicle-related data but the data you collect about how they interact with the programs and information you provide over time, may be highly influential to your programs, as well. This connection is a two-way street.

What will change because of your longer view on driver history? This is unknowable. We know that, in general, driving improves into drivers’ late 20s and 30s and then stays the same for a while, then in their 60s driving safety often declines. But that’s a generalization.

A continuous connection will allow you to see what’s really happening in the moment, anticipate behavior changes, and respond with supporting programs that fit the individual.

Leveraging the Old and the New

Over time, will we be able to see which programs influence driving behavior the most, even while accounting for age and experience? That is exactly what we’re about to find out with continuous connection and driver feedback.

Leveraging the old and the new data will provide insurers with an evolved view of their drivers that will only benefit both sides.

  1. Offer More Value-Add Services

Using mobile phones as the collection tool for telematics, insurers can economically provide continuous connection. This enables carriers to offer more value-add services where they will have the most impact. What does each driver need? Do they need information, inspiration, discounts, or more personalized policy options?

The Time to Continuously Connect Is Now

The largest carriers are preparing truly multivariable models that incorporate telematics data in the algorithm. Driving behavior collected through telematics is already the strongest variable that exists. It will only get stronger as insurers collect and analyze more data over time, and the full power of segmentation is employed via a multivariate model.

Though not every consumer is comfortable allowing the use of telematics, a majority say, “this is a fair way to rate my policy.” Logically, it’s much better than demographics that don’t directly relate to their driving ability and behaviors.

When insurance carriers begin to offer the telematics programs that simply make sense to consumers, and those connected customers begin to share their positive experiences, we will reach a tipping point, and continuous connection will become the norm.

Headshot of Robin Harbage
Robin Harbage
Robin is an insurance industry expert with more than 30 years’ experience as a chief actuary, insurance product manager, and general manager overseeing pricing, marketing, and product development across multiple states for top tier insurance carriers.