77% of insurers unprepared for young drivers, say By Bits
A new study by the motor insurance industry data experts, By Bits, has revealed that 77% of insurers have not evolved their cover to meet the needs of the younger generation of car drivers.
The research, which was conducted using the By Bits SaaS technology platform, found that although the motor insurance industry is still developing at a swift rate, there is a stark difference between the way older drivers use their cars, and the usage for drivers under the age of 35. The insurance experience is therefore not catering to the younger market sector.
According to the research, drivers under 35 want insurers to deliver a more digitally-enabled and inclusive experience, with much greater levels of communication and ongoing engagement.
Almost three-quarters (74%) of under 35s would prefer to use an app to engage with their motor insurer, compared to 54% of older drivers. Indeed, 88% of under 35s say they would find a mobile app that stores all their driving needs in one place as useful, and more than 70% of younger drivers want an ongoing dialogue with their insurer, compared with 54% of older drivers.
Younger drivers share more feedback with insurers
As part of their desire for greater engagement and dialogue, younger drivers are markedly more likely to share feedback with their insurers. The study showed that 37% have engaged with insurers to express their views or to state what they would like their insurer to provide in terms of products and services, compared to only 14% of older drivers.
Speaking about the latest findings, Callum Rimmer, founder, and CEO of By Bits, explained, “The message is clear. Insurers urgently need to get ahead of the seismic behavioural shifts and rapidly evolving consumer expectations that are being driven by COVID-19 and the imminent explosion of new technologies such as electric vehicles and semi-autonomous driving.”
Rimmer said the data shows that motor insurers should review their business models and re-define their go-to-market strategies to meet the needs of a new generation of drivers.
“If they act now and put the customer at the heart of their propositions, then insurers can create genuine differentiation in the market and establish a more sustainable and predictable commercial model for the future, escaping the long-standing race to the bottom on cost.”
Older drivers want more flexibility in insurance
However, the study also shows found that older drivers are dissatisfied with services, especially when it comes to pricing. A decisive 90% of drivers aged 35 and over said they wanted more transparency around pricing from motor insurers, 88% want pricing to be based on actual usage or mileage, and 91% want more easy-to-understand documents.
The research indicates that drivers of all ages are feeling increasingly unhappy about both the products and experiences that they are receiving from motor insurers. Yet worryingly, while most insurers are aware of the need to evolve their propositions to meet customer demands, the data shows that few are taking action to resolve the issues.
The report shows only 11% claim to be actively making useful changes to their approach based on changing customer needs, and only 20% state that they’ve made significant changes to their portfolio in the last 12 months.
In terms of lower-emission vehicles, 80% of motor insurers said the increase in adoption of electric and hybrid vehicles means they will need to change portfolio or pricing models. Similarly, 80% also said an increase in semi-autonomous and assisted driving technology will have an impact.
Rimmer concluded, “Many insurers still appear to be approaching digital transformation and change from a traditional, inward-looking perspective. Rather than thinking first about how best to meet the needs of drivers, their guiding principle continues to be how they can best maintain the status quo by driving down cost and protecting their margins."
He added, "To win in the long-term, insurers need to put the customer first and develop real and lasting choices in products, communication, service, and price.”
CB Insights: US Insurtechs Are Competing In A Global Market
In the first half of the year, insurtech companies around the world have raised US$7.4bn, nearly doubling their funding in Q2. According to Digital Insurance, insurtechs have raised US$4.8bn in Q2—an 89% increase in funding from Q1. But US firms are no longer the sole beneficiaries.
What Are the Stats?
Out of the 15 Q2 mega-rounds—those that top US$100mn—only eight included American firms. Pretty good, you might say. That’s over half! But US companies only made up 38% of the deals, which marks a 10% drop from Q1 and a 12% drop from 2020. Technically, therefore, US insurtechs are less influential than they’ve been in the past. But who says this is a bad development?
Despite my American citizenship, I’d argue that a more globally diverse insurance market is only for the best. Many of the world’s citizens who could most benefit from improved insurance services live outside of the States—and deserve local, tech-savvy services.
Why Does This Matter?
You’re always going to see the typical insurtech contenders from Western countries. For instance:
- German-based wefox: US$650mn Series C
- UK-based Bought By Many: US$350mn Series D
- US-based Collective Health: US$280mn Series F
But it’s critical that we address risk across the world. American insurtechs might be some of the most technologically skilled firms in the industry, but it’s not their first goal to address floods in Southeast Asia, crop destruction in China, and COVID complications in South Africa. That’s why we should celebrate that the recent Q2 round included insurtechs from 35 different countries.
According to CB Insights’ Q2 2021 Quarterly InsurTech Briefing, this was the first time that they’d observed insurtech activity in Botswana, Mali, Romania, Saudi Arabia, and Turkey. And ‘from a product, service, distribution, and underlying risk perspective, we—as a society and as an industry—are moving at an unprecedented speed’, says Dr. Andrew Johnston, Global Head of Willis Re InsurTech.
Just ask CB Insights. InsurTech value propositions have resonated with the world.