40% Of UK Drivers Now Choose To Be Monitored By Their Insurance Company

Telematics is no longer seen as an unusual part of the car insurance business in the UK. Over half a millions British drivers now have policies that are focused on the use of a telematics system in their vehicle.

A new study by the British Insurance Broker’s Association has revealed this astonishing growth in the use of telematics in the UK. The growth in the use of this technology in the past year alone is 40 per cent.

As I have mentioned in an earlier blog, the natural reaction to this monitoring technology from many motorists is to think of an Orwellian “Big Brother” monitoring how they drive, when, and where. But many motorists are actively choosing to give up this information because they believe that by using the technology to prove that they are a low risk, they can reduce their policy cost.

This applies particularly to younger drivers who would be heavily penalised using a traditional actuarial approach to pricing a policy. Many details can be captured by the system including speed, distance, acceleration, braking, and time of journeys. This gives the insurance company the ability to see how often the vehicle is used, when, where, and even how it is being driven.

Any driver who drives carefully, uses their vehicle infrequently, and ensures it is locked away safely at night is likely to find that by giving up their information they will be rewarded with a better policy price. The insurance industry suggests that there is a 40% reduction in crash risk in cars that have the system fitted – people genuinely change their driving behaviour when they know it is being recorded.

Of course in the long term as these policies become more popular and safer drivers all move to telematics systems then I expect those who do not want to give the insurance company information about the way that they drive will be excessively penalised. The assumption will become that those who do not want to be monitored must have something to hide.

We are yet to reach this stage at present, but with half a million motorists in the UK already choosing to be monitored I think that it must be close. We will move rapidly from a situation where most motorists could not imagine being monitored to where most are choosing it.

This is a complete transformation of the insurance industry in a way that benefits the insurers by allowing them to price risk more effectively and also for the customer that is prepared to look after their vehicle. In fact, the only losers are those who engage in risky behaviour – which logically should mean they pay more for insurance anyway.

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What did 1000 car insurance customers say about their current provider’s customer experience?

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The Future of Car Insurance

The Actuary magazine featured a fascinating report recently on how car insurance is changing. It doesn’t sound like a promising read – car insurance is something that most people buy as a legal necessity – but there are several changes taking place in the world today that are having a serious effect on the insurance market.

Think for a moment about the variables that actuaries apply to a regular car insurance policy, your address, whether the car is garaged at night, the value of the car, the make of car, the age and gender of the main driver. These are factors that have caused endless discussions through the years as friends compare insurance costs. The opaque nature of these multiple variables means that it is often difficult to compare products from different companies and additional factors, like your chosen excess, can dramatically impact the price paid.

The customer journey has also become increasingly disjointed too. Customers often complain that their insurance company automatically increases the premium yet if they call posing as a new customer it is dramatically cheaper – why is there no bonus for loyalty is a common cry uttered by car insurance customers.

But car insurance as we know it could be about to change. In fact, there are some insurers that are already experimenting with innovations that I believe will become mainstream in the next few years.

It is a fact that some 19 year olds are careful drivers, yet a teenager cannot tick a box on their insurance application saying “I vouch that I am a careful driver” – it is taken for granted thanks to the law of averages that teenagers drive more recklessly than more experienced drivers. Under the current system it is almost normal for a driver to pay the same insurance premium whether they drive 1,000 miles a year or 100,000.

All these strange anomalies can be addressed by the use of telematics. This is the addition of a “black box” in the car that monitors where, when, and how the car is being driven. Some drivers might not like the sound of being monitored in this way, but feeding this information back to your insurance company in real time can have some distinct benefits for the customer:

  • Careful drivers can prove they are careful regardless of age
  • Infrequent drivers can prove that they rarely drive
  • Drivers can prove that they are not using their car commercially – spending evenings earning extra with Uber for example

Insurance companies can use this data to price the premium more precisely for customers and the only customer who might be penalised by this increased supervision are those who should be paying higher premiums.

But moving beyond telematics there is the rise of the self-driving car. If the experimental vehicles now being tested by companies including Google, Tesla, Daimler, and Apple are on the road by the early 2020s then this will create another dramatic shift in the way we buy insurance. If you can guarantee that your car drives itself 80% of the time and you only take over infrequently then will the insurance companies offer a big discount?

Both these changes are going to completely shake up the way that car insurance is sold in the next 5 years. Insurance is mandatory in the UK so it cannot be avoided, but the customer experience around buying car insurance is going to be very different as we enter the next decade.

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What did 1000 car insurance customers say about their current provider’s customer experience?

Click here to view our league tables to find out who came in the top and bottom 10 now.

Car Insurance Customer Experience


Transforming The Dining Experience

The restaurant business is not known for transformation. Take a look around cities like London and you can see restaurants that have operated more or less in the same way for decades. Rules in Covent Garden was founded in 1798 and takes pride in ensuring that they continue to resemble the place that Charles Dickens would often frequent.

But the restaurant business is tough. The customer experience can be the difference between a customer being a satisfied regular or the author of a one-star review on Tripadvisor. The changing technologies associated with dining, such as reviews and Instagram photos of dishes, have ushered in an era of change, but are any restaurants seizing these opportunities and making a real change?

Some certainly are. As this KPMG document describes, the Japanese-inspired chain Wagamama has been exploring how apps can make service better. Their own research found that the most common complaint from diners is the time that it takes to pay for a meal so they developed an app called Qkr! This allows diners to eat, then pay on their phone and immediately leave the restaurant. The app can even split the bill amongst several diners, therefore tackling a real problem in a clever way.

The KPMG research indicates that the area where restaurant chains are really paying a lot of attention now is personalisation. They want customers to feel that meals are prepared just for them and not just part of a food production line. Brands such as Toby Carvery and Nando’s are singled out for making a highly personalised experience on their websites, and in the restaurants, one of their main areas of focus.

It’s difficult to transform our ideas around restaurants. The customer orders a meal, eats it, and then pays. That’s how it has always been. But in approaching the pain points, such as impersonal service and time and effort required to pay, these restaurant chains are transforming the dining experience.