Digitalization as a way out of the crisis?
In the aftermath of the Covid-19 crisis, insurers face many challenges. One of the most important and urgent to address is the disenchantment between the French and the insurance industry.
According to a YouGov study for lecomparateurassurance.com, drivers in general, but especially the youngest ones, cultivate a certain mistrust towards the insurance world:
- Only 12% of French people understand the ins and outs of their insurance contracts,
- 1 in 2 French people admit to being distrustful of insurance companies,
- 1 in 3 French people say they have had a bad experience when making a claim,
- 25% of young people between 18 and 34 admit to not understanding their insurance contracts.
Eager to improve its image, the car insurance industry has begun its transformation by accelerating its digitalization and by experimenting with new products. Among them, connected insurance, already offered by Altima and DirectAssurance, is gradually becoming a real alternative to traditional offers.
Is traditional pricing still relevant for young people?
One of the specificities of insurance is to price a service without knowing its cost. To ensure their sustainability and financial health, insurers generate pricing models that they refine as much as possible to estimate the probability of claims occurring for a given portfolio.
Therefore, insurers collect a certain amount of information on the customer's profile and driving experience, such as
- claims history
- age and gender of the driver
- type of license
- brand and model of the vehicle to be insured
- place of residence
- the place of parking
- the approximate mileage achieved in the year
- professional use
- and many other criteria.
To offset the risk of additional costs for young drivers (on average, a young driver is four times more likely to cause a fatal accident), insurers apply an additional fee to the premium.
To reduce this surcharge, young drivers have several mechanisms at their disposal:
- Accompanied driving: the additional fee applies for only 2 years instead of 3 and the additional premium paid is reduced,
- The declaration as an occasional driver on the family vehicle, which allows the young driver to gain experience before taking out insurance in his name,
- Buying a used car with a small engine,
- Choosing connected insurance!
Connected insurance, an offer tailored for the youngest drivers?
There are many reasons why young drivers choose connected insurance over traditional car insurance.
The price
Connected insurances are very competitive because the pricing policy depends on the driver's usage or behavior.
There are two types of connected insurance on the market:
Behavior-based insurance or Pay-How-You-Drive
In the case of behavioral insurance, the monthly insurance premium depends on the driver's behavior behind the wheel. Driving is analyzed via a mobile application that uses the phone's sensors to measure several variables (excessive acceleration, sudden deceleration, loss of grip, distraction). After each journey, the application gives the driver a safety, eco-driving, and distraction score. The monthly premium is indexed to the overall score obtained by the driver.
The best-known behavioral insurance offer in France is YouDrive by DirectAssurance. This offer allows young drivers to benefit from a cashback of up to 50% on their monthly premium depending on their driving style.
April with its CoPilot offer for young drivers, based on the DriveQuant solution, is another behavioral insurance offer distributed in France. Linked to a mobile application that automatically analyses drivers' journeys and determines the safety and distraction scores, the CoPilot offer gives the insured a cashback on their premium.
Pay-as-you-drive insurance
With pay-as-you-drive insurance, the monthly premium depends on the real use of the vehicle and not the average use. In other words, the policyholder only pays for the kilometers driven. This type of car insurance is ideal for short-distance drivers.
Altima has understood this well and positioned itself very early on in this segment with an offer calibrated for drivers who drive less than 6,000 km per year. Mileage is tracked by a white-label application developed by DriveQuant for Altima.
A reinvented customer relationship
Connected insurance offers also contribute to the renewal of the customer experience because :
- the registration process is 100% online
- downloading and regular consultation of the mobile application is essential.
Additional services that are popular with drivers also help to generate a stronger customer relationship by offering :
- driving challenges that reward the best drivers and unite a real community around an application,
- innovative features such as automatic accident detection,
- personalized coaching for safer driving and reduced fuel consumption.
A green product that marks a real commitment to the environment
With an appropriate pricing policy, connected insurance is the ideal green product for a car insurer. Promoting a green insurance offer with a fair and flexible price that encourages reasoned use of one's vehicle would meet all the search criteria of young drivers.
Therefore, the rise of connected insurance among young drivers is now easily understandable given the many benefits it offers. Whether in terms of price, customer relations, or environmental responsibility, connected insurance is the perfect offer to attract and retain young drivers in the long term!
