Car Insurance Premiums: Value vs Price is The Solution

“The relationship between premiums and the underlying economy has been fully exposed in the past couple of years, with inflation taking a much greater toll than many thought likely. At nearly 30%, some three times higher than peak inflation, claims inflation has exposed the need for greater efficiencies in areas like repair network management.

“Adapting policies on usage-based systems, or pay-as-you-go do have the potential to favour younger drivers, but on the whole they’re proven to work best for moderate driving. What this does highlight, is having more adaptive products and building greater intelligence through data-driven technologies like telematics, continue to have huge potential.

“We’re also seeing the cycle of insurance where economic changes and forecasted rate drops are indicating the moment to increase their books and grow again through competitive pricing.

“This approach may alleviate customers’ wallet strain short-term, but insurance needs to get out of this price-led trap and find a way to bring a lot more relationship value to its customers. Offering choice, flexibility, and usage-based variability, as well as better service and reduced inefficiency requires insurers to transform in a way they haven’t yet achieved.

“What we need to see now are moves that not only reduce pricing, or stifle price rises, but remove extreme pricing volatility from ‌business models. We need to see dynamic and better-supported repair network management, getting the fix right the first time.

“We need to see claims management capability that keeps customers informed, with intelligent choices, reducing service costs, while paradoxically improving experiences.

“We also need to see better management of long-term capital to protect customers from short-term economic volatility. Volatility-led pricing needs to give way to relationship-led and adaptive insurance, and quickly, please.”