Auto Insurers Engage Customers with Telematics-Powered Teen Safety Programs

Aimed primarily at parents of teen drivers, MAPFRE’s DriveAdvisor and Esurance’s teen driver safety program adapt telematics for relationship rather than underwriting purposes.

Auto insurers continue to explore the use of telematics for underwriting, through usage-based insurance programs (UBI), but some insurers are using telematics and other technologies as a customer experience tool. MAPFRE has launched a free telematics program aimed at improving driver safety in Massachusetts, and Esurance has launched a program to combat texting-while-driving through the use of a telematics device integrated with a teen driver’s smartphone.

Thuy Osman, Novarica.

Thuy Osman, Novarica.

These insurers’ applications of telematics to provide added services break with the traditional insurance model of interacting with the policyholder only at renewal, notes Thuy Osman, a senior analyst with research and advisory firm Novarica. “Instead of seeing the insurer as someone they pay premium to, or someone they deal with when they have a claim—both negative experiences—policyholders can see  the insurer as someone who looks out for teen family members and cares about their safety,” Osman elaborates. “This is a relationship the insurer has to cultivate and it can include simple things such as sending alerts to the smartphone when there’s bad weather or a major accident on the road the customer drives on, or when the car needs maintenance—all data they can get using telematics technology.”

MAPFRE, through its Commerce Insurance subsidiary, will provide, free of charge, a telematics device to qualified Massachusetts as part of  the carrier’s new DriveAdvisor program. Once participants have installed the device in their vehicle, it will store and transmit data about how the vehicle is operated, including typical telematics information such as how a driver accelerates and brakes, the vehicle’s speed and miles driven, statement. Participants are able to review their performance and monitor progress through a confidential personal website. The DriveAdvisor program also offers suggestions about how drivers can drive more safely.

MAPFRE suggests that the DriveAdvisor might be especially useful for parents and guardians of new drivers. MAPFRE/Commerce CEO Jaime Tamayo comments, “We believe that this is a great tool for parents to monitor and help inexperienced drivers.”

Allstate subsidiary Esurance has launched a program of its own that applies telematics to engage parents concerned about their children’s safety while driving.

Esurance’s new teen driver safety program is aimed at preventing teens from texting while driving. When parents enroll in the program, they will receive a small telematics device that they can install in an onboard diagnostics port of the car the teen drives, along with instructions on how to download the insurer’s Esurance DriveSafe app on to the teen’s smartphone. Using Bluetooth and cellular technology, the device and smartphone app interact to monitor the teen’s driving habits and limit texting, web browsing and cell phone use to while the car is moving.

Gary Tolman, President and CEO, Esurance.

As in the MAPFRE DriveAdvisor program, Esurance DriveSafe participants get a personalized site. Accessed through www.esurance.com/drive-safe the site gives parents the option to set preference, access customized alerts about unsafe driving behaviors, such as driving past curfew or speeding, and review trip details to evaluate driving and explore opportunities for improvement. The site also lets participants compare their teen’s driving habits to the average participant in the program.

“Technology has enabled us to change the way people think about insurance, and today we are continuing that pioneering spirit with Esurance DriveSafe,” comments Gary Tolman, president and CEO, Esurance. “This innovative device can help stop teens from texting while driving and make parents and their teens aware of—and hopefully reduce—risky driving behavior that can cause accidents.”

Fundamental Shift

Programs such as these represent a fundamental shift in the concept of insurance service, suggests Karlyn Carnahan, senior analyst, Novarica. In the past, service was manifested how quickly a bill was sent, how fast a policy was mailed, and, of course, how well the claim was handled, she notes. “It’s not just about how well the insurance product is being delivered, but about how the carrier can use their knowledge and scale to provide completely different kinds of service to policyholders – and making it a collaborative self service process,” Carnahan explains. “Carriers are certainly using telematics to become more precise in their underwriting and pricing – but the kinds of services we see below are about enabling policyholders to take control of their own driving behavior – enabled with information that otherwise would not be available.”

MAPFRE’s and Esurance’s offerings exemplify an ongoing trend of auto insurers to deal with the commoditization by providing telematics-fueled value-added services (VAS) to leverage policyholder relationships in new ways, according to Pat Speer, an analyst with Aite Group. These include providing easy ways for customers to obtain information, to report claims and obtain driver safety scores via the same smartphone that measures their behind-the-wheel behavior.

Pat Speer, Aite Group.

Pat Speer, Aite Group.

“Whether insurers tie these services to education, safety, geolocation, vehicle diagnostics, geofencing or emergency road services, telematics VAS create opportunities for competitive advantage,” Speer comments.

American Family’s Teen Safe Driver program was an early example of the trend, according to Speer. Launched in 2007 and promoted not as a discount-based UBI program but as a voluntary education program,  the program used in-car technology such as an onboard camera and telematics to track teens’ driving habits and actual risk events in need of correction, Speer relates.  The company has also offered professional coaches to help teen drivers and their parents understand safe driving techniques.

“The success of the TeenSafe driver program led to the recent release of its MySafetyValet [which debuted at the beginning of 2013], a formal usage-based insurance program tied to discounts,” Speer adds.  “American Family reports it is still rolling this program out, but initial soft returns, mainly in customer satisfaction, have been very high.”

 

Anthony R. O’Donnell // Anthony O'Donnell is Executive Editor of Insurance Innovation Reporter. For nearly two decades, he has been an observer and commentator on the use of information technology in the insurance industry, following industry trends and writing about the use of IT across all sectors of the insurance industry. He can be reached at [email protected] or (503) 936-2803.

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