percentage of negative reactions. It’s clear that while the potential to save money is one of the primary incentives for customers
to try Snapshot, just saving money doesn’t satisfy all customers.
As is the case with trying to define what a hard brake is, customers had subjective views about their driving performance
and the discount they expected to receive. This highlights a
concern that insurance companies need to address. Consumer
satisfaction ultimately will be affected by individual perceptions
of driving ability and any resulting expectations for discounts.
In its advertising for the Snapshot program, Progressive
refers to discounts of up to 30 percent. For some drivers this
creates an expectation that they will receive the maximum 30
percent discount. Most of the current usage-based insurance
programs highlight maximum potential discounts in a similar
manner. While they also report average discounts that are being earned by policyholders, they don’t do this as conspicuously.
One possible way to address this disconnect would be to highlight more prominently the average discount rather than the
maximum discount when advertising the program.
Keep the Customer Satisfied
Usage-based insurance is here to stay. Numerous insurance
companies are either developing these products or already have
launched them in the marketplace. Customers are showing in-
terest in these programs, and growing numbers are signing up to
give them a try. Given the long-term implications for safer road-
ways, even the federal government is advocating an expansion
of usage-based insurance options. Telematics has moved from
a passing fad to a game-changing insurance alternative that has
the potential to grow significantly.
The process of researching and developing a telematics
program isn’t simple. Many aspects need consideration, in-
cluding program design, hardware device options, systems
implications, aspects of data storage and analytics, and wheth-
er to offer additional services. While focusing on these issues
can be all consuming, companies that ignore the voice of the
consumer do so at their own peril. Usage-based insurance
products hold many potential benefits for insurance compa-
nies and their customers, but they also open up the door for
things to go wrong. Customer satisfaction and loyalty levels
that improve with a positive experience could just as easily
deteriorate with a negative experience. With the proliferation
of social media, these experiences will be shared quickly and
widely, potentially influencing the decisions of other current
or potential customers.
Those insurers that are listening to their customers
(through social media and many other channels) can be proactive in quickly addressing problems as they arise. By creating a
more positive experience for their customers, those companies
are more likely to see a better return on their investment in
ROOSEVELT C. MOSLEY, a fellow of the Casualty Actuarial
Society and a member of the Academy, is a principal and
consulting actuary with Pinnacle Actuarial Resources. He last
wrote for Contingencies about social media analytics.
FIGURE 3 Reported Snapshot Discount by Tone
Source: Pinnacle Actuarial Resources
Positive Neutral Negative
Zero Less than 10% 10% to 19% 20% to 29% 30% and greater