Many brokers who sell personal automobile lines know that usage-based insurance (UBI) is frequently cited as one of the most in-demand products in Canada. A new LexisNexis study, however, also reveals that telematics can also be an effective tool for acquiring and retaining small commercial fleet clients.
In fact, 58% of this market, encompassing those with 20 vehicles or fewer, would commit to switching insurance providers for a “fully loaded” package that included a 10% discount in premium, fleet management solutions such as stolen vehicle location services and the ability to use their preferred telematics device.
But while 24% of commercial fleet managers overseeing 2 to 5 vehicles express a willingness to join a UBI program, only 4% are currently enrolled in one.
“For us, that spells a massive opportunity,” said Deke Phillips, director, commercial insurance, LexisNexis.
Brokers who wish to seize upon that opportunity may want to start by contacting their carrier partners and informing them about their interest in a commercial UBI product.
“The first step is to be proactive,” Phillips said. “You want to reach out to preferred carriers, ask if they’re working on a UBI program or have one available.” Once insurance providers see these requests, Phillips argues, they will be motivated to take action on developing UBI programs faster.
Brokers’ responsibilities do not end there, however. Phillips then advises that insurance professionals educate themselves on the nuances of these programs in order to secure future consumer buy-in.
While discounts are attractive to obtaining new clients and renewing existing ones, many will inevitably ask such questions around what data is being collected, whether insurers refuse coverage and or if there are any privacy implications.
“The agent has to be fully prepared to answer those questions, and the only way to do so is if the insurance carrier partner educates them on those,” he said.
Finally, Phillips recommends that brokers begin engaging with clients now, since UBI is headed towards mass adoption, and policyholders who feel neglected may turn to competitor brokers at their time of renewal.
“My last suggestion is to engage with the customer base on this, even if there’s nothing you feel comfortable putting out in the market right now,” he said. “The agent should be frontrunners of this by talking with customers, even if it’s just a casual conversation.”
Although some clients may be somewhat averse to technology, Phillips says it’s critical to stress that UBI may be the most accurate way to measure risk, which can lead to premium reductions. Many fleet managers see that as a welcome change to being penalized for rating factors such as location or “subsidizing all the bad drivers.”
“At the end of the day, the agent has to become the agent of choice, not necessarily through facilitating transactions but adding value to them,” he said.
