Beyond insurance: Using smartphone-based UBI to add value. Caroline Currie, sales director with Autoline Insurance Group delves into the thought process that goes into making a successful mobile app for usage based insurance.
Industry White Paper.
Caroline Currie, sales director, Autoline Insurance Group, on smartphone-based insurance telematics and adding value beyond premium discounts.
Currie is leading the transformation of Autoline Insurance Group from one of Northern Ireland’s largest insurance brokers to an innovation lab that’s creating new products, developing e-commerce and redefining the customer relationship. Her latest achievement was the launch of a smartphone-based insurance telematics app for young drivers, the first in Europe.
Employing the smartphone as a monitoring device for usage-based insurance (UBI) has been hotly debated. It’s a ubiquitous and inexpensive solution, but its challenges include device and operating system incompatibility, instability of the device while in the car and consumer reluctance to be monitored.
Currie spoke to TU’s Susan Kuchinskas about how the app has allowed Autoline to offer affordable car insurance to young drivers, resulted in increased retention rates of existing customers and paved the way for value-added services.
Tell us what Autoline does: Autoline Insurance Group provides insurance for personal and business customers, including for the home, car, travel and property. We are insurance brokers. We make our living on the commission that the insurance company pays us.
And why did you decide to offer UBI products of your own? We had commercial customers coming along to say, ‘My daughter or son is learning to drive, can you provide us with insurance?’ As an insurance broker, we couldn’t get competitively priced motor insurance for those kids. It was absolutely a customer service initiative rather than a revenue generator.
Why did you decide to create a UBI app for the smartphone? We engaged a technology provider, MyDrive Solutions, to provide an in-car telematics black box, and we went to market in June 2012. We began with the black box because that was the only thing available at the time.
[But] even for young driver insurance, we could not make the black box stack up financially at £400. We were not making enough money per policy to allow those margins, so we looked for another alternative. We began our journey to develop a smartphone solution, also with MyDrive. The product name is the Roadsafe Reward App.
What were some of the challenges of using smartphones and how did you overcome them? One challenge was some people having an old mobile handset that wasn’t compatible. We did a deal with a mobile phone company to provide reduced rates for our customers.
Another [challenge] was making sure that the phone was used on every trip. Insurers were nervous that someone would leave their phone at home or register their grandmother’s phone so they’d get good scores that weren’t their own. So we do validation calls to that handset in the first month.￼
But we did some research and found [that] young people don’t go anywhere without the mobile, so that is not an issue.
The last challenge is education – having people understand what telematics is. There’s that fear of Big Brother watching. We’re working with schools and colleges where telematics has taken on more of a road safety aspect. We’re speaking to local government, as well. One great thing about the phone app, as opposed to a black box, is that the phone app monitors individual drivers and provides individual scores.
A lot of young people don’t initially have their own car. The app enables them to build up their own driving score [that] they can bring to us, and we can discount. It also gives the insurer [an idea of] what sort of driver they are taking before they even put them on coverage.
What are the results and benefits that you’ve seen to date? The offering has been particularly attractive to young people because the discount is significant [with] a big premium. If someone is paying £200 or £300 for car insurance, a discount of 20% is negligible. But a young driver could be paying as much as £3,000 for insurance. The beauty of a phone app is it’s not tucked away under the bonnet like a black box. The app is sitting in their eye line, and they’re aware of it all the time. We call it a coach in the car.
Every journey gets a score, and there’s an overall monthly score. We e-mail every customer every month with their score. We invite the customer to link into our website [for] free online coaching if they have a low score in something. And it’s all free. How many customers are using your UBI solution?
A few thousand, out of about 60,000 personal customers. We find the customer relationship has been transformed [through UBI]. It’s [resulted in] a much more loyal and engaged customer because of the level of interaction. We are retaining approximately 92% or 93% of customers.
Have you gained a return on the investment in developing the Roadsafe Reward App? Because it applies mainly to young drivers [who pay far more for insurance than older customers], our income is generally five times more for a telematics customer than for a non- telematics customer.
That said, we haven’t calculated ROI because there is continued investment. Now, we are developing our own app that will be unique to our line. It will include photographs of the car, photos of accidents and SOS buttons. We’re trying to make it appeal to a wider audience than just young drivers.
It seems that Autoline is becoming something different from an insurance broker, more like an automotive services provider. Yes, we’re looking at added value, and we’ve only begun this journey with this app.
On one hand, we’re looking at what the insurance company wants. They want photo opportunities, to see the car, make sure it’s road-worthy and doesn’t have nonstandard equipment.
The insurance customer wants safety – if they’ve broken down, for someone to come quickly. And they might want some rewards for better driving, some rewards people haven’t thought of. For example, if we have a motor trader and a customer goes past the garage twice a day, should we negotiate discounted rates for having your car washed or serviced?
We’ve run a couple of innovation centres where we have people from the fire and police departments, ambulance services, dealers, students and teachers – a wide spectrum of society – to discuss what we can do to make our roads safer.