98% of car insurers face issues with pay-per-mile
A new study from the car insurance industry research body and SaaS insurance platform, By Bits, has found that motor insurers are encountering numerous challenges in offering pay-per-mile products.
The research, entitled A customer-first future for motor insurance, revealed that up to half of motor insurers find speed of deployment and the time to market are the biggest challenges they face in the development of usage-based products.
Another 40% of insurers found that cultural resistance with regard to automation was a factor, along with deployment costs and implementation. Customer resistance, lack of confidence in the marketplace and lack of knowledge were other strong barriers to launching usage-based solutions.
Usage-based insurtech services
However, conversely, and despite the challenges, the study also revealed that the majority of insurers predict that usage-based insurance will become mainstream and the norm by 2025. Over 75% said this was an attractive proposition, despite the fact that currently, only 30% of insurers are offering or attempting to implement pay-per-mile pricing models as part of their product offerings.
Speaking about the research results, Callum Rimmer, founder and CEO of By Bits said, “While it’s understandable that insurers are somewhat hesitant and uncertain, most of these barriers are easily addressed with the right approach and support”.
He continued, “The fact is that it has never been easier to introduce a usage-based offering. The technology is there, and so is the consumer demand, and there is now a huge window of opportunity for those insurers brave enough to get on the front foot and make it happen.”
The data also suggests motor insurance companies are keen to bring usage-based policies to market in a timely and cost-effective way, navigating potential IT Integration and product development issues.
Results showed 82% of insurers agreed that they need to keep up with emerging data-driven ecosystems or risk becoming obsolete. However, the pandemic has contributed to the difficulties, with 86% of motor insurers saying that delivering digital transformation has been a challenge over the past 12 months, while 79% state that keeping up with competitors offering usage-based policies has been difficult.
Rimmer said, “The retention that comes with delivering a more customer-centric and innovative proposition will allow insurers to dramatically increase lifetime revenue per policyholder. But in order to achieve these benefits, insurers need to develop the right mindset and skills to embrace innovation and change.
He added, “They have to finally accept that the future of motor insurance will be very different to what they have known over the last ten or twenty years.”
TrueMotion insurtech acquired by Cambridge Mobile Telematics
One of the world’s leading telematics insurtechs, Cambridge Mobile Telematics, was launched in 2010 and powers 65 enterprise programmes in 28 countries.
Meanwhile, TrueMotion, which launched in 2012, has enjoyed significant success as a telematics operator, raising US$10mn in its seed funding round in 2010, and then partnering with the motor insurtech Noblr in 2019.
TrueMotion has also entered the European market, collaborating with LB Forsikring to promote safe driving in Denmark.
The joining of the companies means TrueMotion’s 150-strong workforce will join Cambridge Mobile Telematic’s already established team, along with their client list, which includes Travelers, Farmers, and Progressive.
The new company will focus on increased interest in using telematics for crash reconstruction in personal lines claims and more innovation in the telematics space.
Speaking about the acquisition, William Powers, CEO, and co-founder of Cambridge Mobile Telematics, described the move as an opportunity to explore new markets, expand throughout the US and bring telematics to a much wider customer base.
"With this acquisition, we will use our world-class talent, technology, and scale to help our partners overcome the complex challenges of global road safety,” he added.
Ryan McMahon, VP of insurance and customer affairs for Cambridge Mobile Telematics, explained that expanding the company with additional talent and customers would help meet the demands of a growing telematics market. He also quoted data from a study by J.D. Power which revealed that personal auto telematics users have doubled in five years to 16% of policyholders.
McMahon told the press, “This market is rapidly expanding, and building more capabilities is more important than ever,” McMahon says. “Both companies follow similar philosophies and grew up in similar ecosystems, and now we’re bringing those cultures together.”
He continued, “Telematics is absolutely the future of commercial auto and rideshare, and it’s kind of a step up beyond the normal telematics."
McMahon added, “We will not only widen our lead in smartphone telematics, but also use our combined talent to invent new products for risk measurement, contextual telematics, and crash mitigation across emerging mobile, IoT, connected-car, video, and sensing technologies.”
Five reasons why telematics is in demand
- It reduces fuel costs and increases operational efficiency. This is a consideration for most commercial fleets given the rising costs of fuel
- The technology enables fleet managers to plan operations with greater precision by providing exact locations, timescales, and speeds of vehicles.
- It improves driving standards and monitors driver behaviour, reducing detours and ensuring responsible driving.
- It helps fleet health and maintenance by monitoring the health of operational vehicles.
- It increases corporate social responsibility in terms of care for the driver, the vehicle, the impact of driving in terms of emissions, and also the security of the vehicle itself.
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