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Insurers unprepared for new generation of drivers, report finds

It found that the motor insurance sector is evolving at a rapid pace and “exposing stark differences” between how older and younger drivers use their cars

More than three quarters (77%) of motor insurers will need to evolve their policies and products to “reflect the changes in how people are now using their cars”, according to a new study from By Bits, a technology platform for the motor insurance industry.

It found that the motor insurance sector is evolving at a rapid pace and “exposing stark differences” between how older (over 35 years old) and younger (35 years old and over) drivers use their vehicles.

It also found that drivers under 35 want insurers to deliver a more “digitally-enabled and inclusive experience”, with more communication and ongoing engagement. Meanwhile, 74% of under 35s would prefer to use an app to engage with their motor insurer, compared to 54% of older drivers.

According to the report, younger drivers are also “significantly” more likely to share feedback with their insurers, with 37% engaging with insurers to express their views or to state what they would like their insurer to provide in terms of products and services, compared to only 14% of older drivers.

Nonetheless, it found that drivers of all ages felt “increasingly unhappy” about both the products and experience that they are receiving from motor insurers. According to By Bits, however, whilst most insurers were aware of the need to evolve their propositions to meet customer needs, few were “currently taking meaningful action to do so”. 

Only 11% claimed to be actively trying to make significant changes to their approach based on changing customer needs, and only 20% stated that they’ve made significant changes to their portfolio in the last 12 months. 

Callum Rimmer, founder and CEO of By Bits, said: “The message is clear, insurers urgently need to get ahead of the seismic behavioural shifts and rapidly evolving consumer expectations that are being driven by Covid-19 and the imminent explosion of new technologies such as electric vehicles and semi-autonomous driving. 

“This means reviewing their business models and re-defining their go-to-market strategies so that they really are meeting the needs of a new generation of drivers which has entirely different priorities and values to previous generations.” 

He added: “If they act now and put the customer at the heart of their propositions, then insurers can create genuine differentiation in the market and establish a more sustainable and predictable commercial model for the future, escaping the long-standing race to the bottom on cost.

“Many insurers still appear to be approaching digital transformation and change from a traditional, inward-looking perspective. Rather than thinking first about how best to meet the needs of drivers, their guiding principle continues to be how they can best maintain the status quo by driving down cost and protecting their margins. To win in the long-term, insurers need to put the customer first and develop real and lasting choice in products, communication, service and price.”

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