Insurance telematics is big business, and while insurers globally are catching on, the South African insurance industry still has a way to go. We spoke to Phila Maboa, Senior Manager for Insurance Channels at Netstar about how insurers can implement the technology across their operations.
“Many insurers in South Africa still don’t fully understand how telematics can be implemented,” explains Phila Maboa, Senior Manager for Insurance Channels at Netstar, a subsidiary of Altron. Telematics can be used to advance their underwriting process, individually connect to clients and backup their premiums with detailed analysis.
Upgrade Your System
“We’ve got a very old underwriting model that deals with risk very differently,” says Maboa. Determining risk based on age and doesn’t determine their driving ability, for example. “Insurers don’t necessarily underwrite the person specifically for what they have the ability to do or the risks they actually pose, as there’s no information that backs it up, except a couple of assumptions that have been aligned to that risk.” Data changes this completely.
“Telematics provides direct information and direct risk underwriting information over time to better understand clients,” Maboa points out.
Insurers will come to understand their clients’ habits, he explains. “Insurers will understand exactly what it is that they do with their vehicle. So when an intermediary is giving a price, they’re not giving a price to a person based on what they’ve assumed in their model but it’s on what their client is actually doing.”
It’s this sense of transparency that results in closer broker-client trust. And in the long run, this is what makes clients stay.
“It just gives an insurer a better client experience and a better user-experience. From a value perspective, somebody knows that they are paying for a particular risk because they are aware of these things that are involved in the way that they conduct their risks, as opposed to the assumption of how the risk looks.”
Telematics makes for a more efficient way of doing business – notably because clients are treated as individuals and not just someone in a cohort.
“From an insurance perspective, it allows the insurer to have the ability to not only be looked at as a grudge purchase,” explains Maboa. This goes a long way to removing the stigma of insurance.
“What the insurer is then able to do is have the ability to ensure that their client is much closer from an interaction perspective,” he adds.
Installing telematics as an offering also allows for showing the exact costs and correlations when being questioned about premiums.
“The intermediary is then able to say the reason why your insurance premium is the way it is is because of where you drive, the times you drive, the risks that you’re exposed to,” he mentions.
“This also gives the intermediary a clients services platform and environment to actually teach clients more specifically about the risk they have.”
“The more an insurer has suitable conversations with their clients and the clients understand what they’re paying for, the higher the insurer’s ability to retain clients will be.”
It smooths the administration process too, he adds. “From a risk perspective and from a claims perspective, an intermediary run will be a cleaner operation because they’ll know what has happened in terms of the incidents.”
Real Life Assistance
And it’s these incidents that can be tended to in an instant with the quick professional response that telematics allows for.
“With telematics we have the ability to have touchpoints with clients,” he explains. “So if an accident occurs we are able to get that information and we’re able to dispatch roadside assistance.”
All of which is crucial on South Africa’s high- risk roads.
“That user-experience and that client information becomes easier, even when a person is stuck on the side of the road they need roadside assistance.”
Quick access to data also guarantees a quick response. “All we need to do is jump into the telematics and we’ll get a direct pinpoint in terms of where that person is and we can dispatch a person that’s much closer to the individual. So, from a user experience, the client doesn’t necessarily sit for ten twenty minutes trying to give us directions or tell us where they are.”
One of the obstacles to using telematics to its full potential is the platform that an insurer is using, explains Maboa.
It isn’t the easiest to add on new tech using the old way of doing things.
“Some of their systems are archaic but the great thing about it is that they are now starting to move into a space where they are able to consume the sort of data that we are giving to them,” he says.
But intermediaries – and the technology that telematics requires – have come a long way.”If you look at incorporating that data into a platform two or three years ago, it would have been very difficult, stringent and very expensive.”
“Now that we’ve got cloud-based technologies and these kind of things, it’s actually much easier for us to plug into those environments and have them consume that information.”
“Obviously that comes with a lot of investments on their side,” Maboa mentions. “Intermediaries have got to get data analysts and the actuarial team needs to be in tune and very much in touch with regards to the technologies that are being offered in order for us to have that ability to become one within our platforms and for the usage of the data to make the right decisions and calls.
Phila points to the shifts in tech that are making telematics even more streamlines, particularly with cloud-based services.”The world is moving in that direction; it’s much easier to access information”
The increase in quality of programming helps too.
“In terms of the software that we use on our end in order for us to be able to give the ability to stop, process and also apply that data is something that’s very important for companies to have. Cloud-based solutions are much easier and integrate much quicker and then default back to be able to consume the data that is being given.”
APIs – and their ability to communicate to insurance products and services from the data they receive from telematics – have sped up the processing considerably.
“We’ve moved from Big Data to what we now call Nano Data – so the ability to process all of that information as quickly as possible becomes very important.”
Telematics isn’t confined to calculations of kilometres on a car anymore. It’s already in our houses.
Phila explains how, for insurance companies, winter is geyser claims season, and so to bring down the costs of a wrecked geyser and the subsequent water damage, a smart thing to do is to install a smart device.
“If you don’t have any IOT devices that sends you information about the risk of your geyser bursting and the risk of geyser leaks, the resulting damage that might come from that would be far much higher than somebody who has got an IOT device that’s sitting inside the geyser,” he explains. “This has the ability to monitor your levels and if there’s something wrong with your geyser they can bring somebody out and have them check it out.”
It’s this conversion of data into action that is one of the fundamentals of telematics that is applicable across all insurable spheres.
“If you, as an insurer, had a gamified app within your space you’d be able to ping high-risk zones where your client is driving through, you’ll be able to show them where traffic is and offer alternative routes which are much safer for them to travel.”
To integrate these systems, intermediaries need to focus on how you work right now, he advises. “The first thing that insurers need to look at is their underwriting models at the current moment.”
“The world has changed. We’re looking at about 45 percent of people who are now working from home. So the first thing one needs to do is look at: what does your underwriting look like? The second thing is: are you able to then implement usage-based insurance?”
That would then inform the insurer’s strategy in terms of the technologies that they need, he says.
It’s important to ask yourself if you’d want to provide a package beyond the basic use of telematics in cars. “Do you also want to get to a point or place where you are able to do not only vehicles – because this is risk-based analysis – vehicle, household and building insurance being plugged in together?”
“This is what we call vehicle-everything insurance so it plugs into your whole ecosystem in terms of functionality,” he explains.
“I think it’s very important for insurers to start looking at technology that will allow them to leverage these kinds of things and put in strategies that are aligned for how the world is moving,” encourages Maboa.
Know Your Target
Take note of who you’re potentially selling to, he advises.”I think it is very important for insurers to have a look at the current markets, the dynamics in the people who are now starting to buy vehicles.”
He cites millennials – those born in the eighties and mid-90s – as a cohort to focus on.
“They’re looking for gamification and they’re looking for higher interaction in terms of any business that they deal with, so it becomes highly important for insurers to have the ability to prepare the correct apps for this.”
“They like to have minute-by-minute data; the ability to have a look at where they are from a risk pool perspective,” he elaborates.
Another challenge is moving away from collective risks and focussing on individual risk underwriting. Phila says he sees this paradigm as becoming the norm in the future.
“People are no longer accepting the fact that they are going to pay a premium purely because an insurer says, ‘You must pay a premium because your insurance looks like this.'”
People want to be able to interact with their own risks and I think you would have been able to see this with a lot of challenges that the financial sector has gone through where people are now saying How does my interest work? How do I have this kind of interest? How do you pick that up?
Intermediaries should look at technologies to help to provide answers to these enquiring minds.
“I think as insurance we have to get ahead of the curve so that before people get to a point where they want minute-by-minute monitoring or information, we should be able to give them an in-depth view of what their risks look like and why they’re paying the premiums that they are paying. I think as an insurer if you’re not able to provide that within the next four or five years, you’ll be left behind the curve.