Growth in the $311 billion auto insurance industry is expected to slow in 2022. While insurers are spending large sums of money to attract new prospects, they’re facing a number of challenges in acquiring the best drivers that will ultimately help them reduce their loss ratios.
The key question is: How can insurers understand who the best drivers are, and do so in the most cost-effective way?
As their customer acquisition costs soar, insurers’ ability to understand and evaluate driver risk is seemingly at a standstill.
Many insurers rely on historical data like driving records, which doesn’t clearly show how policyholders currently drive. Pricing policies based on credit scores, gender, location, or age, too, doesn’t paint a truly accurate picture of driving behavior. At the same time, these scoring techniques often aren’t seen as fair in the eyes of their customers.
And if insurers price their policies too high, they risk losing out on some of the best drivers - plus, 20 percent of drivers with the worst driving behaviors are responsible for more than 50 percent of all auto claims. Thus, a new way to acquire policyholders in auto insurance is needed.
Finding new, profitable customers is a challenge that can be divided into three parts:
- Finding a less costly, more efficient way of targeting prospects
- Finding a more accurate, relevant way to collect driving behavior data
- Acquiring and retaining the best drivers to be profitable for the insurer and attractive to the customer
Acquiring preferred risk through embedded experiences
In our newest whitepaper launched in partnership with Digital Insurance, we explore a data-driven approach to finding and securing the safest drivers: Insurance Qualification Lens.
Through Mobility Risk Intelligence (MRI), insurers today can leverage AI- and ML-powered technology through prospects’ smartphones to solve this threefold challenge.
The Insurance Qualification Lens solution allows them to partner with relevant app publishers to promote test-drive experiences for prospects, enlist the best drivers directly via their smartphones, and acquire valuable driving data - all for fairer, cost-effective, and more profitable customer acquisition.
“Karma Drive delivers on our vision to bring transparency, fairness, and accuracy to our members’ auto expenses with an easy opportunity to potentially save money on their auto insurance. Plus, it might even help them become more aware of ways to be a safer driver.”
- Rory Joyce, head of Credit Karma Auto
Top benefits of Insurance Qualification Lens
The IQL solution introduces the following benefits to auto insurers:
- Lower CAC and improved loss ratios
- Fairer pricing for consumers
- A seamless digital experience for prospects offered entirely via their preferred channel: the smartphone
- Less adverse selection
- Higher customer satisfaction and retention, and increased LTV
At the same time, insurers also benefit from a solution that allows them to get ahead of the curve in an increasingly competitive (and digitally disrupted) market.
Want to learn more about Mobility Risk Intelligence, Insurance Qualification Lens, and how insurers can lead the charge in transforming customer acquisition? Download the full whitepaper below.
