Insurance is facing some of its greatest challenges in the last 100 years, and failure to plan for the changes that will come will ultimately lead to the demise of any scheme.
This section gives you an insight into the types of changes we expect to occur.
The Connected car – historically motor insurance premiums were either set according to an approved tariff taking into account factors such as address, engine size and age, or a more detailed analysis was done including factors such distance, parking location, type of driving and claims history. In either case the premium price derived was based on a series of averages, the connected car offers something more – personal pricing. Whereas in the past a customer’s premium was linked to what other drivers did, there is the potential for the customer to be personally responsible for their tariff. This changes insurance from being a low engagement, grudge purchase to one where the customer takes ownership of the relationship and will require more contact and access to informative data. In the same way smart phones are much more than phones, connected insurance has the opportunity to be much more than insurance. It could include vehicle health, eco driving, better navigation, emergency and breakdown support, theft recovery and so on. By looking at this opportunity from Toyota as a whole there are many parts of the value chain that could be included in the consumer offering.
Other technical advancements – autonomous breaking assistance, lane change warning, auto pilot mode, all these are planned for the future, but the first two are with us now. These features will mean Toyota vehicles cause less accidents, which in turn could reduce the frequency of claim, we say could because it might mean more cars not fitted with this technology will crash into the back of the Toyota in front! In addition because of the cost of this technology there is the possibility that the cost (severity) of the claims will increase. Ultimately with this technology vehicles will no longer be able to crash into each other – what is the future of car insurance then, perhaps to guarantee the technology?
Regulation – we have seen in the UK what regulation can do to the insurance industry with the complete collapse of the multibillion PPI market in a few short years. Through EIOPA’s (European Insurance and Occupational Pensions Authority) recent review we can see the threat to other markets may not be immediate but is real, and it is clear real change in the products we sell is required.
Cultural expectation – You will know this differs between markets, but it also differs between generations, perhaps more so than ever with the digitalisation of consumer interaction. The Toyota customers of the future will use social media as a norm, may not have a home phone, and will expect to be able to conclude financial transactions digitally. This means changing many processes whilst also meeting the expectations of today’s valued customers.
In each of the markets in which we operate the Toyota Insurance Management motor insurance scheme is one of, or usually the most successful, OEM scheme. We have been able to achieve this by meeting the challenges change brings.
There are many other area in which we expect change, do you need help in assessing how your scheme will meet these challenges? You can contact us here.