Disclaimer: Your IE editor was once a happy Hastings customer, with a Triumph motorcycle covered at a fair price, via a call centre chat once a year. That was over a decade ago however, and times change. Recent results posted by Hastings show a 42% fall in profits although it did post a 2019 profit of nearly £70 million, so let’s not get too alarmed.
Certainly the motorcycle insurance market is going to become a tough place in the UK following the Bennetts/Carole Nash merger beneath the Ardonagh umbrella. Savings due to sheer scale and bringing two separate marketing campaigns, admin systems and claims management strategies under one new brand, will give Ardonagh some wriggle room on prices, and multi-bike owner rewards etc.
Then there’s the car market, where renting is replacing buying. Less mileage in towns as councils effectively ban private vehicles, more ride-sharing, more PAYG cover like Zego – app based, no fuss, no MTA fees, no cancellation fees. The switch to offering truly personalised car insurance, based on sifting a wealth of data on the vehicle, and all its drivers, will be a hard road for many companies in the game right now.
Data science is going to underpin the AI that drives quotes, adjusts Pay-Per-Mile rates in real time and ultimately underwrites all risks. Failing to understand that truth will hurt all car insurance specialists, not just Hastings.
There are interesting times ahead folks – fasten your seatbelts.
Manan Sagar, CTO for Insurance, Fujitsu UK:
“Hastings’ fall in profits aligns with the trend we are seeing in the car insurance sector. Competition has made it increasingly difficult for insurers to make headway in a crowded market. The comparison websites, while helping customers switch, are creating an annual cliff-edge for insurance companies. The focus on price is only going to result in a race to the bottom.
“To survive in this changing marketplace, insurers need to change the way they operate: shifting from a ‘repair and replace’ model to a ‘predict and prevent’. Insurers can use the new technologies available and combine them with the vast amount of data they own to create valuable insights and help prevent accidents from happening in the first place. This will require car insurers to adopt dynamic risk-based pricing. In other words, a “smart insurance policy” that shifts in price based on driver data feed; data that provides insights about not just the distance, when and where a driver drives but also how they drive.
“These insights can improve driving habits and promote safety for everyone on the road. It creates a policy where rates increase if a driver goes over speed limits, posing a risk not only to themselves but to the larger ecosystem. Consumers switch insurers in year two because they are being expected to pay more as their first year discounts are no longer applied. However, very few would challenge an increase in premiums for a journey where speed limits are consciously being broken. A real understanding of cause-and-effect would also build trust with customers, who will be less incentivised to switch providers.
“When accidents do happen with “smart policies”, associated data feeds will not just automate claim adjudication and payments but also prevent fraud, saving the insurance industry millions and improving profitability.”