Business

The Transformation of Insurance in The Digital Age

Technology is becoming pervasive and connectivity is consuming our daily lives. Whilst the latest gadgets from Apple and Amazon excite our interest and are hugely desirable, even “must haves” such as car insurance are changing forever.

Since the dawn of the insurance industry in London, insurance has been based on educated guesswork, or perhaps more accurately, insurers have attempted to price risk based on the likelihood of accidents and what we as consumers decide to tell them! This inevitably leads to approximations and consumers being grouped into mega segments such as young or high mileage drivers. The result of this is that the many pay for the accidents of the few!

When we visit a restaurant, or use a mobile phone, we expect to pay our bill not for the table next door or the City guy glued to his phone.

Now, Telematics based motor insurance makes this possible for car insurance. Using a sensor which can range from a smartphone app, to a black box, or data coming directly from a connected car, consumers can choose to qualify themselves as a good driver, benefit from lower premiums, and receive help when they may need it most.

Lower premiums result from good driving behaviour. There is no dark art here. If you drive smoothly in terms of braking, acceleration and cornering, and obey speed limits, taking account of prevailing road conditions, you are statistically less likely to have an accident and you will be rewarded with a lower premium.

If the worst does happen, then the technology will interpret the accident event and enable the insurer to contact the driver to offer assistance or, in more serious events, immediately send the right emergency services. In this sense, your car insurer can become your guardian angel.

This approach also changes the relationship between insurer and insured;

instead of a once a year arm wrestle about price, it becomes an ongoing dialogue based on individual driving behaviour and incentives through premium reduction to maintain loyalty.

This of course is all possible by decreasing accidents and improving the efficiency of the claims process. This truly is a “win, win” business model.

Octo is an IoT company and a global leader in the Insurtech space.

We deliver our solutions through a platform that collects billions of miles of driving behaviour data and outputs solutions to allow insurers and car manufacturers to provide better services to their customers. We think of this platform as being both horizontal and verticle; not only does it do all the things an IoT company needs to do such as data collection, processing, and analysing, but also it provides specific services to insurers to transform their businesses for the age of the connected consumer.

In the 1600’s the insured could only hope that a fair premium was charged. In 2017 consumers and their insurance companies can base their relationship on the immutability and transparency of data.

The interview was filmed with Sarah Lockett, Business Correspondent of The Business Debate and Jonathan Hewitt,Global Chief Marketing Officer.

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