If you ask the average consumer about car insurance, it’s very possible the answer will include an audible huff of frustration, followed by an expression of exasperation.
If insurance could be simplified, with quotes created with no input from the customer, sighs of irritation could be turned into sighs of relief. Imagine! The end of filling in long data requests online for brokers, insurers or price comparison sites, and no more prolonged phone calls.
By accessing existing data already held by car dealers and/or motor manufacturers, insurance providers have the resources to create these quotes independently for customers.
With estimated premiums written approaching £12 billion in 2016 the UK car insurance market is brimming with opportunity, especially to those with the means, methods and technology to capitalise on it.
Translated, that means a partnership between insurance providers, manufacturers and dealerships.
In fact, this close collaboration between dealerships and insurance providers in the UK is not an ‘if’, but more of a ‘when’, and is already operational in the Netherlands.
The exchange of data between dealerships and insurance providers not only makes financial sense, offering unique distribution opportunities and unique data to manufacturers and insurers, but also benefits responsible consumers.
By enhancing Dealer Management Systems (DMS) with an application, there can be an instantaneous exchange of customer information between dealer and insurance provider.
After the car contract has been signed and sealed, a real-time insurance quote is delivered, electronically sent (either by email or SMS) to the customer whilst they’re still at the dealership, sipping on a celebratory cup of coffee.
To keep it simple, car dealerships are perfectly positioned to capture a sizeable slice of the market by focusing on targeting consumers at the point of purchase.
They’re reaching them at the earliest opportunity, giving dealers an enviable head-start before the race has even begun.
Sales staff already collect customer information – name, address, profession etc. – steadily building a profile as the sale progresses, especially if the car is bought on finance.
And, if the customer wants to test drive the vehicle, then driver license information further pads out the customer profile. Currently, much of this information is not used at the point of purchase and merely sits there, collecting digital dust. It’s a wasted opportunity, but it needn’t be.
The benefits of corporate affinity partnerships between car manufacturers and insurance providers are several fold, and extend to the customer, manufacturer and insurer.
The customer is saved the hassle of not only searching for insurance, but they also circumvent any difficulties of coordinating the transfer of insurance from their current vehicle to their newly purchased one.
Car manufacturers and dealers expand their product portfolio with own-branded insurance, whilst claiming first dibs on their new customers.
For insurance providers, costs are reduced by automated systems, and as information is pooled directly from the dealership it lowers the risk of fraud.
And collaboration between dealerships and insurance providers can extend beyond the creation of automated insurance quotes for car sales; it can provide data enrichment to reduce fraud, improve profitability and enhance customer service.
The savviest insurers and brokers are looking towards building ever more detailed pictures of customers, based on information derived from both dealership DMS and existing external databases.
By finding a correlation between say, those who service their cars regularly and those who don’t, alongside rates of accidents, insurance providers can identify meaningful variables which will influence pricing points.
It’s tacitly implied that a driver’s attitude towards the upkeep of their vehicle reflects their attitude towards risk-taking.
This could eventually lead to the creation of an algorithm capable of recognising higher-risk and lower-risk drivers, who would have premiums calculated accordingly.
All risk is relative, and most insurers want to access better quality business – those identified as lower-risk could be offered discounts on their premiums.
And as we move cautiously, but steadily, towards automated vehicles, it’s clear car insurance is on the cusp of revolution.
With the industry considering the possibility that risk may be transferred from the individual driver to the manufacturer, forging closer relationships between manufacturers, dealers and insurance providers seems pragmatic in the face of inevitability.
Author: Ian Wardle, business development director, Maiden Insurance Partnerships