The latest rant from the Editor’s high-backed leather chair;
Long ago, when the internet was still just an obscure platform for academics to share their latest gossip about second homes and bossy-boots Bursars, there were just two basic options when it came to car insurance; Fully Comp or Third Party Fire & Theft.
Of course now that Britain has undergone a tech revolution and the High Street retail sector has been swept away, citizens are tried on social media rather than in court and even seven year olds own a smartphone there are erm, STILL two options when it comes to car insurance. Three, if you count Business Use. It really is a pitiful state of affairs and radical change is long overdue. Here are just three good reasons why;
RENT IT, DRIVE IT, PX IT
First, we are increasingly renting our lifestyles, not owning them and this sea change in social attitudes is writ large in the car market, where people have long since sussed that the cost of depreciation is the real millstone, not the finance agreement. Who wants to kiss goodbye to 35K in capital, when you can rent that sleek new Merc for £330 a month and make the neighbours sick with jealousy? The core Comp policy being offered should be PAYG cover, entirely driven by the driver(s) use, mileage, commuting vs leisure travel & an industry agreed app score.
The idea that one company thinks full 5g late-braking on a motorway slip road is fine, while another rates that as average is unworkable. Standards on driver scoring MUST be univeral, or they are unfair. And we all know where unfair PPI charges led to, don’t we?
It goes without saying that anything calling itself Fully Comprehensive should include Gap insurance, because the value of the asset is at the very heart of the car leasing deal, right? I mean tell me I’m crazy, but the average person thinks the word `comprehensive’ means including all the main risks – and being stuck with the cost of the rental agreement is exactly the same as insuring the value of a car that is owned outright. People want insurance against a catastrophic financial loss – end of story.
SMARTPHONES DRIVE THE DEALS, DATA DRIVES THE UNDERWRITING
Secondly, we all have a tracking/listening/data gathering device in our hands; the smartphone. All a consumer has to do is tick a box agreeing data sharing via an insurer’ app, and a truly personalised car insurance deal can be offered. Not only that, but fine tuned with driver data, so that next year’s renewal is based on actual, real life work destinations, travel, speed, braking, leisure locations and driving style usage, not some finger-in-the-air figure plucked from an imaginary underwriting tree.
Beyond smartphones, the next generation of cars will have built-in telematics, plus driver assistance, and the insurance industry will have a battle of epic proportions when it comes to accessing this data. The solution may be a partnership arrangement, with car makers and phone network suppliers, to effectively pre-load insurance app technology into new smartphones.
One thing is certain, the brokers, MGAs and insurers who don’t embrace every part of smartphone tech; voice activated search, gyroscope data analysis, automated back-up of journeys & more, will fall by the wayside, just as High Street brokers shops like Swinton are vanishing from our streets.
Not everyone will be comfortable sharing all their data with insurance companies, but those refuseniks will be a minority, and they can be offered a more basic type of insurance, which will of course, be more expensive to manage via call centres and human intervention at the point of sale, and settlement of a claim. The industry can actually upsell this service, call it a Concierge Car product for example.
THE GIG ECONOMY IS NOW THE REAL ECONOMY
If you surveyed a random 100 people and asked them to define Business Insurance cover most would say it is something a van driver with a big drill, or a hot pizza requires – but not them. The truth is that many people now freelance, offering a variety of services in exchange for cash, and that is a business, even if HMRC don’t know the half of it.
So let’s separate the self-employed tradespersons and Yodel delivery drivers from the less high risk freelance pool of drivers. Be honest, the risks of teaching dance classes on Tuesday nights, or a DJ-ing a wedding disco two Saturdays a month, are not the same as hammering a Transit along the UK motorway network six days a week attending various building sites.
Again, use technology so that the freelancer can activate their cover on a PAYG basis, as Zego offer their delivery riders. Why would you want extra business miles cover to be operational, when you are at home watching Loose Women waiting for the next dog walking, guitar lesson or SEO troubleshooting gig to pop into your email inbox?
Away with this take-it-or-leave-it attitude. Let’s rebuild car, van and motorcycle insurance from the ground up and make it truly flexible, affordable via monthly payments, devoid of sneaky cancellation fees and completely customisable by the consumer.
Most important of all, insurers and brokers need to be 100 percent clear about what is being covered, front and centre. No outdated language, no tricky Ts&Cs buried on page 27 and a largely automated claims settlement system, with updates via social media/text/email, whichever the customer prefers.
If our industry doesn’t fix the broken car insurance market in the UK, someone else will.