Don't Use a "Me, Too" Strategy on UBI

Many companies merely replicate a UBI policy in the market so they can claim to be up to speed, but they miss huge opportunities.

I recently attended an outstanding industry conference. It really was one of the best-produced conferences I have attended since I started presenting at conferences (too) many years ago. The keynote speakers were all insightful celebrities, and the swag was better than what Santa has delivered to my house for the past two Christmases. Oh, yeah, and the presentations weren't bad, either.

During some of the breakout sessions, I overheard some conference attendees discussing their overarching strategy for usage-based insurance (UBI). I heard a couple of the usual comments, "We're waiting for all cars to have embedded connected car technology," and "We're looking for a smartphone solution."

However, I did hear a new comment that a couple of attendees admitted their companies have employed: the "me, too" strategy. I was a little caught off guard when I heard it. It is not an ideal strategy for deploying a UBI program. But it is plausible that those trying to minimize policyholder attrition would make the attempt.

In a "me, too" strategy, company X creates its own version of a product that already exists in the market, so that, when it is mentioned that competitor Y has this product, company X can say, "Me, too!"

This strategy might be more effective when selling hammers. Obviously, UBI is much more dynamic and should be part of a much larger strategy of improving risk management, pricing accuracy and policyholder intelligence. The data and analytics created from gathering valuable driving data have a wealth of utility.

Forgive me, I got lost in my own UBI infomercial...

Let's get back to the harmful impact of the "me, too" strategy on UBI. Typically, products launched under this strategy are not properly funded beyond product launch, as the program goal and the launching of the product are one and the same. Any long-term goals do not include improvements to the product, and any real value of the product is rarely realized.

The immediate negative impact of employing a "me, too" strategy is seen in the lack of resources to properly distribute, manage and improve the product. The approach also relieves anyone of responsibility for the product (or program), thus no one is required to show results or improvement.

In the long term, policyholders must endure the brunt of the "me, too" strategy. Their experience with an insufficient UBI product is poor, at best. Participation in the program steadily decreases, or stagnates. Either way, participant numbers never come close to those listed in the business case. Moreover, the product and program are disparaged in the market, and the company and ecosystem all receive negative marks from policyholders.

There are certainly better strategies that offer greater returns in the short and long term. I encourage those considering a UBI program to take a long-term approach. Gather information from multiple sources and pay just as much attention to the back-end management system for the overall program as you do the bells and whistles. It is the back-end management that will ultimately deliver a best-in-class UBI product as well as the data analytics, and more of the true program value.

Here is a bit of information that will be helpful when comparing back-end management systems. Look for the following:

  1. Responsive dashboards that provide visibility into key performance metrics so you can make informed decisions about your program.
  2. Data visualizations and program analytics embedded within the product to help you understand month-over-month program growth and analyze impacts of marketing campaigns, seasonal effects and geographical adoption.
  3. Program diagnostics that provide you with detailed business intelligence to manage program health and identify areas for follow-up, such as potentially fraudulent behaviors.
  4. Flexible reports that support online viewing, scheduling and exporting to fit within your best practices and business needs.
  5. Flexible enrollment capabilities that support all stages of program growth with enrollment interfaces that support single to bulk enrollments, all backed by fully automated enrollment integration.
  6. Integrated device tracking tools that provide full insights into shipping and the cadence of devices reaching your customers.
  7. Comprehensive logistics tracking that is available throughout the account lifecycle -- from enrollment, shipping, delivery, installation and continuing data reporting for each user.

I hope this is helpful information. If you have attended any high quality connected car or UBI conferences, please drop me a note, as I am doing my own planning for 2016.

Curt Davies

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Curt Davies

Curt Davies is the U.S. director of business development and strategic alliances at Intelligent Mechatronic Systems (IMS). Davies has more than 15 years of experience developing strong strategic partnerships and leading business development as well as product development efforts.

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