Discovery Insure was in a “sweet spot” where business written so far looked set to exceed the company’s business plan targets set in 2011, it said yesterday. It was already in a spot which the global short-term insurance market was regarding as the future: insurance telematics.
When Discovery Insure launched in May 2011, its unique use of telematics in motor vehicle insurance garnered it in excess of R1 million of annual premium income.
While other insurers used telematics to track insured cars in the event of theft and hijacking, Discovery Insure took it a step further by using the technology to improve its members’ driving skills and then reward them as they improved.
“In March I was in London at the UK telematics conference and they were talking about a lot of things as though they [were] the future of telematics and those are things we [are] already doing,” Themba Baloyi, the executive director of Discovery Insure, said yesterday.
One of the most advanced things that Discovery Insure had done in telematics was to develop what the firm called driver DNA, he said.
After placing a tracker in the car, the driver DNA was formed by learning the daily routine of each driver and their habits, such as speed, corner acceleration and breaking.
“If the vehicle is driven abnormally, we can start predicting whether that vehicle has been stolen or if it has been hijacked. We have a couple of cases already where we called the user and the client was not even aware that the vehicle had been stolen,” said Baloyi.
By the end of the 2013 financial year, Discovery Insure had 33 251 policy holders. In the interim period to December 2013, its new business grew by 40 percent to R257m and the company’s annual premium income was now close to R1.1 billion.
The Discovery Group estimated that Discovery Insure now accounted for 12 percent new business market share.
Due to its advanced use of telematics, the company had realised a 70 percent reduction in claims ratio among its better drivers when using an indexed base of 100, Baloyi said.
Another telling aspect in the success of telematics was the company’s low lapse ratio. Using the base of 100 again, the lapse ratio among advanced drivers was around 26 percent.
The data that the company had collected showed that over 12 months, poor to average drivers improved their skills and habits by up to 29 percent.
Good drivers exhibited an improvement of 36 percent and there was a 137 percent increase for members who had become “excellent” drivers after a year.
“The moment people start receiving their incentives, the moment they start tasting the benefits, that’s when we start seeing a dramatic change.”
The company took its telematics offering to all drivers in South Africa when it launched its smartphone driving app in this month. The app measured driver behaviour and provides tips on how to become safer drivers.
More than 30 000 drivers had downloaded it at the weekend and according to Baloyi, only 30 percent of them were existing Discovery Insure members.
“We’ve achieved our key objective of creating better drivers with it… We are hell-bent on innovation and more is to come,” he said.
Baloyi was tight-lipped about the product that Discovery Insure would launch in August. But he said a lot of research had taken place, including in the field of more affordable insurance.