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Author: Nishant Shiv |11/17/17

How Insurers and Car Rentals can collaborate to win a traveller

As per the Research and Market report, the global car rental industry is expected to reach an estimated $99.6 billion by 2022 and it is believed to grow at a CAGR of 5.5% till then. In a travellers' survey conducted by Google, only 48% of leisure travellers saw a clear difference between car rental brands. The core competencies of key players, i.e., providing new, clean and reliable cars are no longer sufficient to give them an edge. Customers are now looking for personalized experiences with offers and prices tailored to their needs.

Factors influencing a traveller’s decision:

Let us first understand some of the major factors that influence leisure and business travellers and see how rental car insurance for travellers can make a difference:

Leisure Traveller

Business Traveller

1

Reviews

Reviews are critical for leisure travellers and any negative review impacts their choice

Reviews

Business travellers want to understand what their experience will be

2

Price

Price is an important factor for leisure travellers, once satisfied with the reviews

Price

Price is a major factor as business travellers recognize a good deal offered to them

3

Ratings

Rating is the next major influencing factor and it needs to be towards the higher side

Loyalty

Business travellers will always be driven by loyalty and the accumulated points

Source: SAS Voices

As you can see, pricing is one of the top influencers for travellers. Hence, their preferences to look out for car rentals is high. This gives enough leverage to the personalized insurance for car rentals industry to become a key influencing factor.

How does insurance become a key component of the influencing factors:

  • Impact on Price: Based on our interaction with various online car rental booking platforms, we noted that insurance is usually 15-45% of the total car rental price, depending on the options selected by the customer. Therefore, competitive insurance pricing can have major impact on overall cost of the car rental. The below table shows pricing components of a car rental split by insurance and non-insurance components:

Non-Insurance

Insurance

  • Rental Cost (based on type of car)
  • Mandatory Charges and Taxes
  • Extras (navigation systems, music systems, child seats, mobile Wi-Fi etc.)
  • Mileage Limits
  • Pickup & Return Destinations
  • Fueling
  • Collision Damage Waiver (CDW) or Loss Damage Waiver (LDW)
  • Supplemental Liability Protection (SLP)
  • Personal Accident Insurance (PAI)
  • Personal Effects Coverage (PEC)
  • Car Hire Excess Insurance (damage to the tires, windscreen and under-body of the car etc.)
  • Impact on Reviews and Ratings: If we look at the car rental journey of a customer, insurance plays a major role during the following phases of the journey:
  • Car Hiring: Offer relevant insurance packages with unambiguous information and competitive pricing to the customer to enable informed decision-making. This will result in a positive interaction with the customer resulting in positive reviews and ratings.
  • Claims Handling: If an incident takes place, a proactive and smooth claims handling will have positive impact on the customer’s sentiment.

Use cases on how insurers and car rentals can collaborate:

Before we discuss some of the use cases, it is important to understand the key parameters which may have an impact on what insurance packages can be offered, the pricing and the source for providing data for those parameters:

Insurer

Car Rental

External

Policy & Premium Data

  • Insurance History (policies purchased, premiums paid etc.)
  • Credit Score

Claims & Loss Data

  • Location Theft History
  • Location Driving Conditions (based on loss location & loss type data)
  • Loss Analysis Data
  • Medical History

Customer Data

  • Gender & Age
  • Marital Status (optional)
  • Profession (optional)
  • Booking History
  • Pickup & Drop Location

Car & Maintenance Data

  • Car Make & Model
  • Car Safety Features
  • Miles Run
  • Maintenance History
  • IoT and Sensor/Telematics Data

Weather Forecasts

  • Weather Warnings for the Driving Location

Social Media

  • Driving Conditions
  • Customer Reviews & Experience

Let us now look at some use cases collaborating data from insurers, car rentals and external sources:

  • By leveraging a combination of telematics, big data and analytics, insurers can utilise geo-fencing services based on sensor data from cars and loss history. This will promote safe driving and create new business opportunities with add-on coverage opportunities.
  • Leveraging data from telematics system to collect Usage Based Statistics and merge it with claims/loss data to create a much more accurate risk assessment profile of its individual customers. This will enable customers to enjoy fairly-priced insurance pricing through personally tailored products such as 'pay how you drive' propositions which will also encourage and reward safer driving rather than offering a rack rate for all the customers.
  • Managing claims better by correlating claims data with operational data, customer data and policy data to improve operational efficiency.
  • Advanced data analytics including quantitative data analysis, text mining and heat mapping to identify patterns in clients’ sentiments towards car rental insurance through social media and compare them with clients’ industry peers data. Identify sentiment drivers and create benchmark comparisons, uncovering unseen insurance specific issues.

Car rental industry is increasingly moving towards being a competitive marketplace with disruptive technologies and new players are emerging with disruptive business models to challenge established players. However, the established car rentals and insurers are sitting on top of insightful data which gives them a competitive edge. All it needs is collaboration between the two to create an analytics platform where they can share the relevant data and generate insights to offer competitive and personalized insurance offerings for the travellers.

A similar view is echoed by one of my fellow colleagues where he has described how customer experience plays a key role in influencing customer’s loyalty; and insurance is one of the key components that can influence factors impacting overall customer experience and loyalty.

Do you think collaboration of car rentals and insurers should be motivated? What other benefits can the collaboration result in? Let us know your views in the comments or write to us at info@mindtree.com.

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