The Disruptors is a series of features looking at new ideas within insurance, and talking to the movers and shakers bringing them to market.
Car insurance is undergoing a rapid transformation. People are no longer willing to spend hours, sometimes days, shopping around for the cheapest quote. Plus, many consumers would like some rewards for safer driving, loyalty to the insurer and some useful bolt-ons, like getting a return on trading their personal data.
Insurance Edge spoke to Penny Searles CEO from Smart Driver Club, which is pioneering a new way of thinking in the motor cover market.
IE: Smart Driver Club is an interesting concept because it goes beyond everyday car insurance, tell us what makes it different.
PS: I guess we are aiming to make Smart Driver more about the policyholder’s lifestyle, than simply offering insurance. It’s about convenience and extra value, with consumers able to ask `what do I get for sharing my data, apart from cheaper cover?’
IE: The telematics unit you have is very easy to use; literally just plug into a car’s diagnostic port and that’s it – fit and forget. That seems a big advantage over telematics units which have to be fitted by a car technician at a dealership or Halfords.
PS: Definitely, really easy to use. But the interesting stuff to do with telematics is yet to come. Things like smart roads, connected cameras fitted front and rear to vehicles, hazard detection and traffic jam alerts etc. The data gathering capability of cars in the future will be immense and the potential it offers insurers equally huge.
If you just take one everyday part of driving, like say parking, and then imagine how useful it is to know where the car is parked overnight, where it is being left in the daytime, how is it being manoeuvred exactly, how many stops does it make each week at a pharmacy, a supermarket, cinema and so on?
IE: There is an obvious tie-in for many other companies here isn’t there, but will GDPR restrict that growth in offering add-on services?
PS: I don’t think it will. Look, insurance and financial services are arguably the most regulated and compliant area of the UK economy, far more so than say estate agents, repair garages, hotels or many other smaller companies. I think those smaller SMEs are going to have some big challenges ahead with GDPR but the main players in car insurance are already geared up for the new rules.
A business like Smart Driver is actually offering consumers something tangible in return for their data. Nobody – not one policyholder – has said to us, please don’t share my data.
IE: Why is that, what benefits are they getting?
PS: There are some real money saving features within Smart Driver Club. For example, you get a phone alert when it’s time to renew your VED tax, or it’s getting near MoT time. Neglecting both of those bits of paperwork can result in a fine, plus points, so for many customers that is a truly useful service.
You can see alerts if there’s a fault with your car, plus it calculates your average mpg per trip too. Basically any car manufactured after 2004 can link to the Smart Driver Club app and the owner can see how improving their driving habits is saving them money.
The other thing that our members love is seeing exactly where their car is, at any given time of the day or night. This is great for family cars with multiple policyholders, because many parents are keen to see where their children are, or where they are parking the car. Around three-quarters of our customers are logging into the Club app once a week, which is a really high level of engagement.
IE: The Plug-in telematics gadget acts a sa tracker too, but is it easy for thieves to simply unplug it?
PS: So far, that hasn’t been an issue. Maybe it’s because car thieves are not quite aware of how different devices work, or where they installed. What we are seeing across the sector is more cars being stolen simply for parts, even everyday hatchbacks, and so the appeal of telematics is growing. Research suggests that many pro thieves will steal a car and then park it for a few days, to see if the Police locate it using a tracker.
Obviously if your car is moving and you have parked it, then you’ll get an alert via the app, so you the policyholder can call the Police as the car is mobile. We had a case where a car was stolen, plus a set of keys to another vehicle. We tracked it and the Police waited until the vehicle finally stopped for some time at an industrial unit, before making a recovery. Some 20 stolen vehicles were found at the same location.
IE: Do you think car companies will eventually fit trackers or black boxes as standard to most cars?
We feel it’s likely that more manufacturers will fit some kind of telematics unit as standard in many cars very soon, but the question will be; what access will the car owner, and insurers, have to that OEM tracking and driving data?
IE: The result could be that car makers keep the driving data to themselves, choosing to share it primarily for commercial uses like reminding you when it’s dealer service time, MoT, or offering deals on part-exchanging your car?
PS: Exactly. As insurance specialists we want our telematics unit to act as a tracker, vehicle documents reminder, plus driving style mentor. Once you tell a customer that smoother, safer driving can reduce their insurance costs, they are more than happy to trade data. If you add a few cherries on top like restaurant deals, or a first time shopper voucher for say £10 when you park at a retail outlet, then you truly have a club, not just an insurance policy.
Some insurers seem determined to own data; store it, analyse it, use it to calculate risk. That’s fine, but unless the industry convinces drivers that their data can be traded for a range of benefits which actually fit around their lifestyle, then they will come up against consumer resistance to more data sharing.
The younger smartphone generation has no issues about sharing all this stuff, they just want something in return. The central question is about control; who do I choose to share data with, and why, what’s in it for me? That’s where Smart Driver Club becomes an interesting offer because it has so many layers of value which go way beyond a policy certificate in a drawer.