Spotlight: Motor data: Taking today's customers into the fast lane

As well as expecting to be able to buy insurance online quickly and easily, Millennials are much more likely to share their views online. Getting it wrong can cost an insurer its reputation.

The bar is set pretty high too. “It’s not a question of comparing us to other insurers,” says Charlotte Halkett, general manager, communications at Insure The Box. “They compare their insurance purchasing experience to shopping on Amazon.”

To make the grade, insurers are well aware they need to change. Cumbersome application processes, repeated data entry and impersonal customer service simply won’t wash with Millennials. “It’s got to be quick and easy but Millennials also expect their experience to be personalised,” adds Halkett. “Motor insurance is one of the most expensive purchases they make, so it needs to feel special. Why spend £1500 on motor insurance when the experience is a bit like having a bucket of cold water thrown over you?”

Relationship benefits
While this transformation will require considerable investment, David Williams, technical director at Axa Insurance, says building a stronger relationship with customers will benefit insurers. “In the past, unless there was a claim, we had no contact with our customers apart from at renewal. It’s hardly surprising customers don’t feel any loyalty to us and switch on price every year.”

He points to some of the customer relationships that are already being built in other areas of the insurance market as examples of the potential. These include Vitality's life and health insurance products, where customers receive regular rewards for leading a healthier life, and More Than's Doggyssentials, which gives customers everything from the food to flea treatment alongside their pet insurance. "I can see more affinity-type schemes emerging," adds Williams. "These are closer to the customer and can help to create a stronger relationship."

Changing needs
The way in which millennials view car ownership is also changing. For example, rather than buy a car, millennials are much more likely to consider car sharing and car clubs instead.

As a result, motor insurance will need to be much more flexible in areas such as cover type and term. Jon Mansley, head of digital strategy and propositions for general insurance at LV, explains: “There will be increasing numbers for whom the motor insurance policy we know today will no longer seem applicable. The way risk is covered for drivers may change and be delivered through products that are not in the market today.”

Changes in vehicles are also likely to shape tomorrow’s motor insurance policies. Allen Seddon, head of data development at BGL Group, says that cover needs to match the technology that Millennials have. “Vehicles are becoming increasingly connected,” he explains. “If you can sync your phone to your car, why shouldn’t you be able to sync your car to your phone and use it to inform your insurer about your vehicle and how you drive it?”

Data enrichment
To create the slick, personalised experience that millennials expect, data has a much bigger role to play. Already insurers are using external data sources such as My Licence and the electoral roll to reduce the number of questions they need to ask, but the question set remains chunky.

“Millennials only expect to have to answer one or two questions and then they think we’ll get the rest of the information,” says Jill Elliott, head of customer proposition at Aviva. “We need to use external data sources wherever possible as well as using the information we already hold more intelligently to ensure the process is as frictionless as possible.”

For this reason the insurer created My Aviva, which holds an individual’s personal information so it’s available for new applications and can be amended once across all their policies if changes occur.

Telematics has also enabled insurers to gain a much better insight into an individual’s driving risk and use this data to build a stronger, more personal relationship. “We reward our telematics customers if they drive well and we also use the data to help them improve their driving,” explains Kenny Leitch, global telematics director at RSA. For example, out of 15,500 interventions with its customers regarding bad driving habits in 2015, it only had to cancel 602 policies where customers didn’t make any improvements.

Data control
While data could help motor insurers move towards the Amazon-style sales experience Millennials demand, there are potential issues. “There’s a growing concern about data privacy,” says Leitch. “More people want to be in control of their own data, which may make it more difficult to access in the future.”

The solution to this may be giving the customer some form of incentive in exchange for their data. This could be the financial rewards already seen on telematics policies but it might be something that helps them with their driving, such as travel, parking or fuel information. Elliott explains: “We could use our data to help them avoid accident black spots or buy cheaper fuel. This way our service is more personal but it also becomes a utility.”

Changing customer demands
The other obstacle for insurers comes on the technology front. Saddled with legacy systems, it can be difficult to adapt to changing customer demands. “This is one of the biggest challenges for insurers,” says Elliott. “Change is happening quickly and having big, old systems can make it much more difficult to respond.”

However, insurers are finding ways around this, working with specialists and start-ups to build the propositions that customers want. For example, Elliott says that she might look to develop an app-based proposition rather than build it into the legacy system.

It’s a similar story at RSA, where a standalone system can be built for a new product. “This enables us to be agile and test different propositions quickly with customers,” says Leitch. “Long gone are the days when you had two years to get a product to market.”

And, with stronger relationships a key benefit of developing a motor insurance proposition that really appeals to Millennials, the race is certainly on to win this particular market.