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Blog: How can insurers adapt to the ever-changing automotive landscape?

car sharing

One of the biggest challenges facing motor insurers is delivering a service that attracts and keeps customers, while keeping control of premiums argues James Roberts, business development director for insurance at Europcar Mobility Group UK.

James Roberts Europcar
James Roberts, business development director for insurance, Europcar Mobility Group UK

Data from the Association of British Insurers showed a fall in the cost of motor insurance in 2018 – albeit just a small decrease of 1% year-on-year. However, not all the press headlines have reflected the ABI’s data, with other sources suggesting increases of nearly 3% year-on-year.

Pricing for premiums is a complex issue and, of course, there are groups of drivers who represent a greater risk than others. Advances in claims management, cost control and a zero-tolerance approach to fraud have certainly delivered savings for some motorists.

Technology is making the motoring experience more tailored to the driver’s every whim, from the early adopters of new low emissions advances– such as hybrid or electric – to those who need high performance for long hours on the road. 

The emergence of the gig economy is adding another dimension to the motor insurance landscape. Of course insurers need to be given complete transparency over vehicle usage. But if they are prepared to underwrite ‘gig workers’ then an even broader range of vehicle types has to be considered. And that adds another layer to the claims process.

With customer loyalty hard won – and customer expectations high – the insurers that want to win in the retention stakes are looking for partners that will enable them to give policyholders as close as possible like for like replacement vehicles. Smart thinking in terms of the procurement process for this aspect of the services that underpin the insurer offering is, therefore, absolutely essential.

Jack of all Trades

But what is the best sort of replacement vehicle partner? Is it the organisation that promises they can do everything – a one stop shop; a ‘jack of all trades’?  Or is it a supplier that openly acknowledges it may not have everything an insurer needs in-house, but that it has the right partners and alliances to meet the brief?

Evolving driving habits mean a wider range of vehicles is being insured; and a wider range of replacement vehicles is, therefore, needed to make the claims experience as smooth as possible. A policyholder who usually uses a small van for their day-to-day driving is not going to be happy being offered a compact car while their vehicle is off the road. Nor is a driver used to being behind the wheel of a high performance saloon.

Of course, insurers need to have confidence in their supply chain to help make the customer experience as smooth as possible. But in those times where it’s the delivery platform that counts, rather than the number of branches or vehicles owned outright by a supplier, working with partners that can demonstrate adaptability is actually probably more valuable.

An open-minded approach to the number of suppliers being used is also worth considering. Putting all your eggs into one basket can certainly improve buying power.  But is that at the detriment of the service experience?  A long-standing supplier can become complacent, so there’s never any harm in introducing a second tier provider. Healthy competition can enhance the service offering from all providers. And it means there’s a back-up in case of service issues with the lead supplier.

Making the shareconomy work

Insurers are also now recognising the advantages of tapping into the shareconomy. Not every policyholder wants to get into another vehicle when theirs is off the road.  They simply want a mobility solution that will get them from A to B. And that means the replacement vehicle supply chain needs to start thinking smarter too. Providers that can give access to tap and go car share on the street; taxis or even chauffeur drive – all from one booking platform – are likely to be able to enhance the insurer offering in a tangible way that should pay dividends when it comes to renewal.

The motoring landscape is changing radically. Insurers are already moving with those changes and it’s vital that they build a supply chain that moves at the same pace – if not faster.

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