Around 90% of drivers aged 35 and above want more transparency in pricing for motor insurance 

More than three-quarters (77%) of motor insurers need to evolve their policies and products to reflect changes in driving behaviour, according to the latest research from By Bits, published today (24 June 2021).

The report, A Customer-First Future for Motor Insurance, interviewed 1,000 UK drivers who arrange and pay for their own motor insurance, as well as collated answers from 102 senior decision-makers from insurers and brokers, including chief executives, managing directors, heads of product and innovation, operations directors and finance directors. By Bits commissioned the project, which was undertaken by Insight Avenue in January and February 2021.

It found that the motor insurance sector is evolving at a rapid pace and exposing stark differences between how older drivers aged 35 or over and younger drivers under 35-years-old use their vehicles - subsequently, this affects the services and experience they expect from their insurers.

Callum Rimmer, By Bits’s founder and chief executive, 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 redefining their go-to market strategies so that they really are meeting the needs of a new generation of drivers [that] has entirely different priorities and values to previous generations.

”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.”

By Bits is a software as a service (SaaS) technology platform for the motor insurance industry - it is a spin-off business co-founded by insurtech By Miles in January 2021.

Ongoing engagement

The research indicated that drivers of all ages are feeling increasingly unhappy about the products and experience they are receiving from motor insurers.

However, while most insurers are aware of the need to evolve their propositions to meet customer needs, very few are actively actioning this.

For example, the study revealed that only 11% of motor insurers claimed to be actively trying to make significant changes to their approach based on changing customer needs.

In comparison, 20% stated that they have made significant changes to their portfolio in the last 12 months.

Further breakdowns within the research revealed that drivers under the age of 35 want insurers to deliver a more digitally enabled and inclusive experience, with much greater levels of communication and ongoing engagement.

Almost three-quarters (74%) of drivers under the age of 35 would prefer to use an app to engage with their motor insurer, compared to 54% of older drivers.

Meanwhile, 88% of drivers under the age of 35 said they would find a mobile app that caters to all their driving needs useful, while 70% of younger drivers want an ongoing dialogue with their insurer, versus 54% of older drivers.

Rimmer said: “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.”

Younger drivers are also significantly more likely to share feedback with their insurers as part of their demand for more engagement, with 37% already having engaged with insurers to express their views or to state what they would like their insurer to provide in terms of products and services. This is compared to only 14% of older drivers.

Pricing transparency

On a separate note, the research further found that older drivers are also not satisfied with the service they are receiving from insurers, particularly when it comes to pricing.

For example, 90% of drivers aged 35 and above wanted more transparency around pricing from motor insurers, whereas 88% want pricing to be based on actual usage or mileage and 91% want more jargon free and easy to understand documents.

Looking further ahead, 80% of motor insurers said the increased adoption of electric and hybrid vehicles will mean they will have to change portfolio or pricing models.

Similarly, 80% also said the increase in semi-autonomous and assisted driving technology will have an impact.