Including ‘accident forgiveness’ with any usage-based insurance solution may be needed to motivate better driving, says one Ontario analyst, as auto insurers embrace telematics.
“But we have to be concerned with the people who are going to have the negative experience: an accident or a ticket or two,” says John Ilias, manager of portfolio analytics, corporate underwriting and risk management at CAA South Central Ontario. “They come in expecting a discount and end up with a surcharge. What are they going to say?”
Jack Palmer, project director with Telematics Update, the organizer of the upcoming Insurance Telematics Canada 2014 conference on May 28-29, told Insurance Business that Canadian insurers are luring consumers with the promise of discounts, but this will not keep their attention for long.
“To be sustainable,” says Palmer, “programmes must be designed to build and retain a loyal customer base.”
The Toronto, Ont. conference and exhibition is taking a look at what is already working in other markets – particularly south of the border, where telematics has been marketed by the insurance industry for upwards of three years.
For many insurers, the best indicator of clients continuing to choose telematics will be after they have been using the devices for six months or a year, says Ilias.
“The true test of UBI is going to be the first renewal,” says Ilias. “We now have the data, and we can tell how that data and the user jibe.… If he can get all those discounts and max out at 25 per cent, then he’ll tell all his friends.” (continued.)
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Citing the United States as an example – as that country has been using usage-based insurance for almost three years now – incorporating further incentives to ensure drivers don’t become soured on telematics should be considered.
“A lot of American insurance companies have the idea of ‘accident forgiveness,’ where they’ll sometimes let one accident slide, without having it affect the rate,” says Ilias. “It might be useful to adopt something like this, just to keep them and motivate them to be better drivers.”
For more, see: '
Marketing telematics more than just discounts' and '
There will be a learning curve on telematics'
