Social Fleet Insurance?

JohanStrydom

Hi all, thanks for the posts (including the devil's advocate ones). Just to make it clear, I'm on this forum independently and though I work with a number of insurers I'm not representing any of them in my thoughts.

I was actually hoping for public (rather than broker/underwriter) comments on if the product would be attractive. I found useful feedback on other forums hence I thought I will give MoneySavingsExpert a try, so surprised that its mostly insurance industry replies and not public. Still, very interesting.

I have helped and continue to develop Telematics Insurance products which are a quantum leap from traditional insurance in terms of accurate (fair)pricing. Not only are there new ways of segmenting the market, but exposure measurements are much better compared to the traditional fairly useless "vehicle year". One of the reasons I was interested in Social Fleets are the self selection one would expect. From an insurer perspective this could be significant when traditional underwriting and pricing fails or become illegal. E.g. the ECJ Gender Ruling kicking in Dec 2012. The Gender ruling and CIE law change affecting uninsured vehicles is driving interest and to see a few of the options in the market, have a look at comparethebox.com. I expect the telematics products in the market to double every six months with insurers like insurethebox.com and co-op and brokers like coverbox.com leads the way in educating the market with a number of big names about to launch soon too.

For those of you who wonder how the pricing and underwriting will work, familiarise yourself with the technologies - look at ctrackintelligentinsurance.com and many others from the fleet telematics market moving to personal lines.

For those of you familiar with the technical pricing of car insurance, you will know this is commercially sensitive but those who understand the details will know credibility theory such as Buhlmann Credibility can be used to blend prices based on different groups one associate with a risk. As such small fleet pricing methodologies can be used within personal lines (if you have the technical skills to know how to blends rates). More exact details will probably be trade secrets - there are reasons why companies like Sabre and Admiral consistently post good results in a market where everyone else stubbornly does not evolve with the times.

I hope that clears up some questions you might have, but as i said, I really were looking for feedback on attractiveness of such a product rather than if it is possible.

Thanks

mikey72

JohanStrydom wrote: »

......... there are reasons why companies like Sabre and Admiral consistently post good results in a market where everyone else stubbornly does not evolve with the times.........

I like him more already. :beer:

mikey72

"drivers within a Social Fleet are covered for no extra cost to drive each other's vehicles? "

How would that work if half the fleet has a box that added on a premium if the car is moved out of hours, by another one of the fleet drivers, who hasn't a box fitted?


edit - Buhlmann, two n's please. What's the chances of that spelling mistake happening?

huckster

I really don't see telematics being applied to most personal lines risks within the next 10 years. Yes it will have a place for younger drivers.

In regard to companies like Admiral, I presume they have conducted more inteligent research of pricing and claims data, so they can target business that is more profitable. I have never found Admiral to be competitive, because I am probably not a target customer of theirs. I live in a low risk area, have 10 years+ no claims experience, have over 20 years driving experience and pay around £200 year for comp cover.

In regard to social fleets, yes I could see 'family policies' being popular for some, if it provides a solution for younger drivers to obtain more affordable cover. Perhaps a younger driver would be more constrained in their driving behaviour if there was an affect on the 'family policy'. Telematics I suppose could be applied to each car the family owns.

JohanStrydom

"How would that work if half the fleet has a box that added on a premium if the car is moved out of hours, by another one of the fleet drivers, who hasn't a box fitted?"

It will work by simply making a box compulsory. :beer: Details can be sorted out after all cross subsidies are understood. The main issue for any product is first - "will it be attractive as a product?" - then work on getting it priced right.

Do some research on the Snapshot product of Progressive in the USA and see how a self install box can also do the job. No box - no discounts.

mikey72

Telematics appears to be too new to be properly implemented yet.
It is getting off to a very bad start though, if you look at some of the complaints.

The main one appears to be buying the blocks of mileage.
Too low, it's punative to top up, and too many, the carry over to the next insurance period is at about a 1p in the £1.

That's after the complaints on initially getting the box actually fitted. This can be fixed though, it's just the logistics of delivering the box that need to be sorted.

The first problem of adjusting the mileage will kill it straight away, as any cost saving is wiped out, and if customers don't see a saving overall compared to normal policies, it becomes a cynical marketing tool, to keep clients off the road, reducing the risk to the insurer, for a policy that costs the same in the end.

JohanStrydom

huckster wrote: »

In regard to social fleets, yes I could see 'family policies' being popular for some, if it provides a solution for younger drivers to obtain more affordable cover. Perhaps a younger driver would be more constrained in their driving behaviour if there was an affect on the 'family policy'. Telematics I suppose could be applied to each car the family owns.

Restricitions such as minimum "drive behaviour" scores can be incorporated to limit high risk young drivers but not those with low risk profiles. E.g. those who regularly speed in residential areas will understand if they are not allowed to drive their rich uncle's jaguar.

mikey72

JohanStrydom wrote: »

"How would that work if half the fleet has a box that added on a premium if the car is moved out of hours, by another one of the fleet drivers, who hasn't a box fitted?"

It will work by simply making a box compulsory. :beer: Details can be sorted out after all cross subsidies are understood. The main issue for any product is first - "will it be attractive as a product?" - then work on getting it priced right.

Do some research on the Snapshot product of Progressive in the USA and see how a self install box can also do the job. No box - no discounts.

I wouldn't be interested in one on mine, and you haven't explained how you'll know who's driving, unless you're saying no fleet car can be driven by anyone out of hours, not just banning the young drivers.

mikey72

Already young drivers are being penalised if the mechanic is speeding when he's servicing the car, so you need to sort that before using the data to assess risk.
Anyone from the fleet could be driving.

JohanStrydom

mikey72 wrote: »

Telematics appears to be too new to be properly implemented yet.
It is getting off to a very bad start though, if you look at some of the complaints.

The main one appears to be buying the blocks of mileage.
Too low, it's punative to top up, and too many, the carry over to the next insurance period is at about a 1p in the £1.

That's after the complaints on initially getting the box actually fitted. This can be fixed though, it's just the logistics of delivering the box that need to be sorted.

The first problem of adjusting the mileage will kill it straight away, as any cost saving is wiped out, and if customers don't see a saving overall compared to normal policies, it becomes a cynical marketing tool, to keep clients off the road, reducing the risk to the insurer, for a policy that costs the same in the end.

Most insurance companies like Amaguiz in France and Hollard in South Africa following the over simplified mileage route are making losses. There are plenty of research out there pointing out which miles are more dangerous than others. E.g. an urban miles is multiples more dangerous for an insurer than a motorway miles, so yes you are right, many of the current products are over simplified and wrongly priced.

On the complaints side - this is aimed at high premium policies - the ones who subsidies the high risks they are associated with (low NCD, young drivers, convicted drivers, toxic post codes, etc.). Few complain about the discounts they receive and most are happy to be monitored in return because they know they are lower risks