To differentiate themselves with telematics, UBI carriers are already offering a number of valuable features, including:

• Immediate feedback on how customers could drive more safely.
• Alerts about potentially hazardous road conditions or traffic slowdowns.
• Roadside assistance and/or immediate claim notification in case of an accident.
• Location of lost or stolen vehicles.
• Geo-fencing to allow parents to monitor a teenager's location and driving behavior. (The same service could be offered to those concerned about elderly drivers.)

Carriers might also consider capitalizing on the location-based capabilities of their telematics connection by working with related service providers to steer policyholders towards the nearest towing, auto repair, and car wash facilities. They could even offer access to information about restaurant, retail, and entertainment options in the driver's immediate area.

Making insurance 'fun' with telematics

Taking this a step further, gamification—that is, the application of gaming concepts to a broader commercial experience—might also be channeled through telematics to further enhance the customer experience and spur greater loyalty among policyholders.

Insurers could provide reward points for improvements in driving behavior, relative to their own performance as well as against a broader or more targeted policyholder pool. In this way, telematics could make the policyholder's relationship with their auto carrier more interactive, gratifying, and perhaps even fun—certainly not an attribute traditionally associated with insurance!

A big part of “gamifying” insurance would be to provide regular incentives for behavior that prevents losses, thereby generating value for insureds and carriers alike throughout the policy year. This would make auto insurance more of a proactive, prevention-driven engagement, rather than a reactive, price-driven commodity.

Such incentives could go beyond any premium discounts and boosts in deductibles. Indeed, “players” in the insurance “game” could earn reward points if they drive in a way that limits risk and prevents losses, based on telematics monitoring. For example, carriers could set up a weekly or monthly safe driving competition among friends or colleagues insured by the same company (which could perhaps provide an incentive for policyholders to refer others to their carrier).

Perhaps the points earned could be directly redeemed not only for traditional insurance benefits, such as lower deductibles or higher limits, but to trade on affinity relationships with vendors both related and unrelated to driving.

Through gamification, insurers might establish an ongoing, more mutually beneficial relationship with policyholders, rather than relying on price or claims service alone to compete. As a result, consumers may be less tempted to change carriers at renewal based on a somewhat lower price offered by a competitor, if it means having to surrender the reward points they have built up, as well as no longer being able to play the particular “insurance game” offered by their provider.

For more information about telematics, including a recap of Deloitte's consumer research into the market for UBI, see “Overcoming Speed Bumps on the Road to Telematics.”