Volvo Financial Services, the financing arm of manufacturer Volvo Group; and
These and other recent insurance collaboration announcements in the automotive industry portend a significant evolution to come, according to industry experts.
Functionally, REIN’s
“Despite point-of-sale being an such an obvious way to make the insurance buying process more efficient and easier for the consumer, there’s mostly been a great deal of talk,” says Jeff Goldberg, EVP of research and consulting at Novarica. “So far, we’ve only seen a few examples, such as travel and event insurance or extended warranties.”
Now, “we’re definitely seeing the emergence of a new approach,” he affirms. “It’s reflective of the insurance industry’s shift to being consumer-driven in order to meet customers where they are and offer a simplified, streamlined experience.”
Currently, the REIN/Volvo (VFS) program is in the final phases of piloting with customers in selected markets. A nationwide rollout is expected to begin later in 2021 and, thereafter, in select international markets throughout the approximately 50-country VFS footprint. Born from the iLabX accelerator program sponsored by VFS in 2019, the integrated insurance offering stemmed from REIN’s participation in that initiative. “We identified how we could use our platform to create a service that connected insurance carriers with commercial vehicle purchasers during the sales cycle and provide insurers with data-driven underwriting insights,” explains Travis Wherry, COO at REIN. “So we pitched a pilot to VFS.”
For the pilot, a single insurer was invited to participate. However, VFS and REIN officials emphasize the carrier-agnostic platform can be scaled to support an unlimited number of insurers. “We’ll definitely need multiple carriers to fill out the product suite,” says Chris Roback, VP of sales and customer experience at VFS.
As vehicle insurance is required for financing, VFS was keen on the idea. “Because our goal is being a total transportation solution provider, we see this program as beneficial in multiple ways,” Roback says. “It makes it easier for customers to do business with us as well as enabling dealerships’ Finance and Insurance (F&I) managers to be more efficient.”
Metrics generated by the pilot bear this out. For customers who apply during normal business hours and provide the needed information, quoting can be completed in under 5 minutes. The entire quote/bind/issuance process takes less than an hour, compared with 24-48 hours for a typical commercial trucking insurance broker.
Overall, the goal is alleviating operating expenses for vehicle purchasers. “Insurance premiums currently rank among the top 10 costs for operating a truck,” Roback says. “With a data-driven approach to streamlining purchasing, risk assessment and risk mitigation we hope to address this significant pain point for our customers.”
According to Goldberg, the VFS/REIN initiative highlights numerous insurance industry trends that contribute to market capabilities for developing of point-of-sale solutions.
“Access to real-time data and analytics insights are allowing insurers to consider new methods and models for partnering with third parties and policyholders,” he says. “It enables carriers to think about how they can form larger relationships with customers by expanding to services around coverage, ways they can move from a risk indemnification posture to risk mitigation and prevention, and, finally, how they can customize coverages to the very specific needs and behaviors of individual insureds.”
In addition to opportunities, programs like VFS/REIN are also presenting unresolved industry dilemmas. “With point-of-sale insurance, a customer’s primary relationship is with the seller rather than the carrier,” Goldberg says. “However, insurers still acquire customers, who interact with them directly for servicing and renewals, plus they gain knowledge that helps with reducing risk.”
Due to REIN’s deep integrations with Volvo Group systems, as well as those at VFS, Roback points out the potential advantages of the program go further than the sale.
“In the future, by monitoring truck, surrounding traffic and driver behaviors and combining this data with the safety specifications built into our trucks, we can boil it all into data and insights that can be used by insurers to mitigate risk through risk management and, more specifically, accident prevention,” he says. “Additionally, we can use data and analytics to reduce downtime when accidents do occur.”
For large carriers that have spent billions on building their brands, insight-enabled acquisition via a third party may not be enough. “In the future, we might even see scenarios that flip the model, where insurers lease vehicles to customers and coverage is included," Goldberg says.
But regardless of the eventual distribution models, he expects point-of-sale solutions to affect the entire industry. “No vertical will be untouched by point-of-sale partnerships and ecosystems,” he emphasizes. “For instance, you may see property insurance bundled into the purchase of a home, renter’s insurance included with an apartment or commercial insurance as part of leasing office space.”
This doesn’t mean customers will no longer have choices independent from a seller’s offerings. “At least over the next five years, the norm will be purchasing insurance through traditional channels,” says Goldberg. “And, although point-of-sale offerings will expand significantly, I don’t ever see them becoming the only way to purchase coverage.”
Longer term, Goldberg foresees an eventual evolution past insuring items based where they are in the production and consumption cycle. Instead, they’ll be covered by a single insurer from creation to discard.
“Rather than having separate insurers working with manufacturers and consumers, we’re starting to see carriers considering ways to reduce risk by covering products across their lifecycle,” he says. “In that model, point-of-sale offerings will target each of the different insureds as a product moves through production, transport, purchasing and resale, but the insurer will stay the same.”
