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How to Thrive in a Stagnant Auto Insurance Market – Driveway

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Article Synopsis : The U.S. auto insurance market though huge ($175b) has been relatively flat in terms of real growth over the last decade. Growth at the carrier level has come mainly through acquisition.

 The Digital Insurer reviews Driveway’s Report on How to Survive and Thrive in a Stagnant Auto Insurance Market

UBI is for growth-minded insurers, in private auto and beyond 

In “How to Survive and Thrive in a Stagnant Auto Insurance Market”, Driveway makes the case for UBI telematics as an accelerant to growth. Based on findings from a study on UBI released by the National Association of Insurance Commissioners (NAIC) and the Center for Insurance Policy and Research, the report discusses the following UBI strategies:

  • Strategy #1: Expanding market share – Adopting a freemium model for UBI telematics
  • Strategy #2: Honing in on growth markets – Using telematics  to tap new market segments such as Millennials, Seniors, Unbanked drivers, and Low-income drivers
  • Strategy #3: Differentiated offerings – Personalising, incentivising  and engaging with customers on a (more) regular basis via telematics
  • Strategy #4: Premium retention – Using telematics to minimise risk and reduce claims costs
  • Strategy #5: Taking action sooner than later – Acting on telematics to preclude marginalization in the marketplace

Most insurers think of telematics in terms of discounts only. While it’s true most if not all UBI offerings to-date have targeted discount-minded buyers, telematics can also be leveraged as a marketing tool to attract and retain higher value customers.

Link to Full Article:: click here

Digital Insurer's Comments

Telematics transform risk from an invisible phenomenon rated retrospectively in blocks or pools to a live data feed rated and priced in real-time on a population of as little as one. UBI in private auto is merely the first market manifestation of the broader digitisation of risk. Most insurers ignore UBI for technical and/or operational reasons. Hey, why go through all the trouble, invest all that money, just to cut prices? The thing is telematics aren’t just a niche or fad, they’re the future of insurance. Carriers who invest to understand and deploy the technologies will create competitive advantage over those who don’t, in private auto and beyond.

Link to Source:: click here

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