4 Reasons Ingenie's Usage-Based Insurance Strategy is Different

The British insurer is shaking up the marketplace across the pond with its unique approach to usage-based insurance.

At Celent's "Creative Disruption: Technology and the Future of Insurance" event Thursday, the first third-party speaker didn't appear on stage. Ingenie founder and CEO Richard King appeared in a video outlining his company's unique business model.

Ingenie launched in December 2011 with financial support of a former footballer, Gary Lineker; Steve Broughton, formerly a managing director of the RSA Insurance Group; and his brother Sir Martin Broughton, chairman of British Airways. But that wasn't always the plan. Following is some information about its origin and other reasons why Ingenie is unique among insurance peers:

It was supposed to be a vendor. King said in the video that the company "was originally going to be a technology play -- we were going to build the [telematics] technology to sell to insurers so they could use it." In fact, King notably had been part of the team that founded P&C technology and BPO vendor Innovation Group. But there had been some notable usage-based insurance failures in the UK market, which meant insurers were skeptical of the technology. So, the company decided to offer the financial side of the business as well as the tech side.
It focuses on some the most difficult drivers to insure. In addition to only writing telematics-device-backed business, Ingenie provides insurance only to 17- to 25-year-old Britons, who at the time of its launch faced such high premiums that many were forgoing driving altogether, Celent's Jamie MacGregor said before King's video. In the U.S., many insurers are focused on getting drivers with the best risk profiles on their telematics programs -- not poor ones.
Its target demographic informs its customer experience. Ingenie encourages its drivers to check on their driving habits in hopes that they'll improve any risky behaviors. But customers weren't going to their computer to do so much after six weeks or so on the program. "What's important is how you present that feedback to the young person," King said. "After a couple of months, young people aren't reviewing their data. So we designed an app and now we give feedback Twitter-style." The company has also found that its target demographic "doesn't want to pick up the phone" when they require service, they'd rather post it online in social media. King says Ingenie is adapting its customer servicing accordingly.
It's not worried about the cost of the box. Recently, Aviva's UK arm re-entered the usage-based insurance market with a smartphone app-based program. It was the company's previous failed foray into telematics -- when it was called Norwich Union -- that soured UK insurers on the concept for several years. Its choice of method for re-entry might give people pause about black box-based programs like Ingenie's, but King says the box is worth the trouble. "Eighty-five percent of our conversions are online, and the one disadvantage is high frequency of misrepresentation," he says. Sending the representative out to check the insured's paperwork when fitting the device helps it price the policy correctly, he adds.

Nathan Golia is senior editor of Insurance & Technology. He joined the publication in 2010 as associate editor and covers all aspects of the nexus between insurance and information technology, including mobility, distribution, core systems, customer interaction, and risk ... View Full Bio