By Soul Abraham, Chief Executive for Retail at Old Mutual Insure
The COVID-19 pandemic and subsequent lockdown have disrupted all industries and the insurance sector was not spared. Vehicle insurance was particularly affected as the lockdown changed many south African’s driving behaviour.
This was the first direct effect of the lockdown. Indirectly the lockdown also fundamentally changed the way we and our customers worked and interacted thus driving customer expectations for greater digital engagement and innovation. For our part as Old Mutual Insure, we were able to quickly adapt to these changes.
USAGE-BASED INSURANCE
We responded to the new circumstances by accelerating our plan to leverage our digital resources. One of the first things we did was the creation of a bot called UBI, that could save our policyholders up to 30% on their motor vehicle premiums each month. Essentially UBI allows policyholders to save money if they drive less relative to their pre-COVID-19 driving habits.
Data from Tracker, a vehicle recovery business with over a million South African subscribers, indicates that, in the first month of lockdown, the average South African vehicle owner drove 1 150 fewer kilometres, spent 30 hours less on the road and saved R1 350 in fuel, compared to previous months.
While Old Mutual Insure and some other insurers introduced reduced premium options reflecting the fact that people working from home during lockdown were generally only using one vehicle for occasional essential trips, these discounts were not based on individual data. It also did not reflect the actual use and risk reductions of individual policyholders.
“Data from Tracker, a vehicle recovery business with over a million South African subscribers, indicates that, in the first month of lockdown, the average South African vehicle owner drove 1 150 fewer kilometres, spent 30 hours less on the road and saved R1 350 in fuel, compared to previous months.”
The changed circumstances that vehicle policyholders are finding themselves in during lockdown, coupled with increased financial pressure due to reduced incomes saw us rapidly advance the development of a user-based WhatsApp chatbot.
This chatbot called UBI, short for user-based insurance, represents a significant innovation in being accessible to customers on their phones, via WhatsApp. UBI enables Old Mutual customers to use their phones to photograph their odometer readings and send a pic of their personal vehicle mileage via UBI each month.
LESS RISK EXPOSURE LEADS TO SAVINGS
The Covid-19 pandemic is driving a fundamental shift in policyholder behaviour, resulting in less risk exposure. It is only fair that this reduced risk translates, accurately, into savings for individual customers. We believe that money in the bank is the best strategy to support customers to manage the impact of the lockdown.
Fortunately, the technology is here to provide individualised user-based data via WhatsApp to a busy little bot able to reduce premiums in line with personal vehicle usage. Since Old Mutual Insure’s UBI does all this ahead of premium deduction each month, our bot keeps money in our customers’ pockets, which is exactly where it belongs in these challenging time.
LISTENING TO CUSTOMER NEEDS
Technology is however not a replacement to listening to the customer and meeting their needs. For example, during the lockdown last year many of our customers were unable to renew their driver’s licences during the extension period and that this was a cause for concern about the insurance implications when involved in an accident or insured incident while driving with an expired driver’s licence.
As part of our solid commitment to treating our customers fairly, we made the necessary concessions on all valid claims, with consideration of the COVID-19 lockdown situation. Therefore, all our customers whose driver’s licences expired will enjoy a grace period until 31 August 2021 to renew their driver’s licences.
