How can reliable PAYG technology and enhanced data attract new business and increase sales? This Opinion piece by Adam Gooch, Trakm8, Business Unit Director for Insurance, takes a look.
With multiple insurers starting to roll out their PAYG (pay as you go) car insurance products, its anticipated that these new policies will become increasingly popular amongst younger drivers as well as benefiting drivers currently driving fewer than 3,500 miles per year.
PAYG insurance – or – also referred to as Usage Based Insurance (UBI), monitors one or multiple aspects of your driving, this can either be based on how much you drive or the way you drive. By analysing the data collected from this, insurers are able to adjust your car insurance premiums accordingly.
PAYG or usage-based insurance products in the existing insurance market are actually not commonplace. The likes of By Miles are probably the most well-known provider of PAYG insurance product and with the success obtained By Miles, coupled with a significant increase in demand for these products and consumer buying habits changing, this is a trend that many other insurance providers are now adopting.
There is a major spotlight on the insurance industry at present and to keep up with the new challenges and changing demands, customer service in the insurance industry is more important now than ever before. Insurers want to ensure that they are keeping up to date with the latest changes and trends, whilst also ensuring that they are using the best and most reliable technology. This is essential to serve their clients demands and also help understand risk, manage loss ratios, and reduce costs.
PAYG insurance is beneficial if you drive less, driver who spend less time behind the wheel are deemed by many insurers as a lower risk of making a claim, therefor they will pay less. Things to consider here will be mileage, speed, driving behaviours such as acceleration, braking and the time of day motorists are using their vehicle most frequently. Likewise, with a PAYG policy, if you are considered a safer driver, then you are also considered lower risk for insurers.
There are now a wide range of different PAYG insurance options: pay per mile, pay per hour, “black box” (telematics) policies or pay how you drive policies, all of which also require telematics data. It is important that insurers who are looking to move to PAYG insurance can deliver the right services to each individual policyholder requirements.
Trakm8 is enabling more PAYG type products and currently supporting many of the UK’s leading insurers to help bring these new products to their policyholders.
Insurers need to be aware that different devices support different types of insurance schemes, for example, for higher risk drivers many insurers benefit from the comfort of a professionally installed hardwired device to track driver’s behaviour.
However, when it comes to PAYG insurance products, the OBD device has some real USP’s. These USP’s include and are not limited to the ability of the device to read the “true mileage” from the car’s ODO and to track whether tracking technology is being removed from vehicles.
OBD technology highlights when a device may have been removed, driven and not recording the mileage. It can also help reduce costly issues related to vehicle break downs through further insight on car performance, vehicle battery health or prompting dashboard warnings. These are but a few reasons why the OBD is seen by many as the “device of choice” for PAYG products.
By supporting several PAYG insurance products at present, Trakm8 are well versed on the requirements and needs of the insurance market in this area. More insurers are looking for a one stop shop for hardware, software, and data services as well as quick and easy end to end fulfilment options to end users.
PAYG insurance is a trend that is here to stay and the spotlight will remain on insurance companies to provide the best customer service. There are many factors to consider when choosing the appropriate technology and software to enhance policyholders experience, our recommendation will always be to verify that any new technologies which you might be using are accurate, interoperable, and reliable.
Reliable technology and enhanced data will help insurers attract new customers through the sharing of data to assist them in making informed decisions, which will in turn lead to better pricing and the best customer service delivery.