Tower Insurance leading digital evolution

Insurance isn’t known for its innovation. It is an industry that has traditionally sat on the sidelines as the digital revolution causes major business upheaval. But not any more.

In the New Zealand insurance sector, Tower has been working on some clever little digital advances, including the distribution and development of its SmartDriver app, which rewards safe driving with reduced premiums. 

Launched in April last year, customer uptake and use of SmartDriver has well exceeded expectations, says Tower general manager, Mark Savage.  

Tower Group general manager customer proposition Mark Savage

Given that more than 60% of Kiwis own a smartphone, Tower expected the app to be popular but it still bucked forecasts.

“It went off like a rocket. We achieved the same level of volume in two to three weeks, as we thought we would achieve in two to three months,” says Savage.

SmartDriver uses smartphone sensors and GPS to track a vehicle’s speed, acceleration, braking and cornering. Customers who use the app, and prove that they are a safe and careful driver over a minimum distance of 150 kilometres can save up to 20% on their vehicle insurance premiums. 

One reason for launching SmartDriver was for Tower to attract a larger proportion of younger drivers. Research shows users of the app are split evenly across under 30s and 30 plus, says Savage.

“While we met our goal to bring in younger customers, it was interesting to see that this app has wide appeal among all age groups.” 

For example, many parents of first-time or young drivers get the app because they are keen to be able to monitor how safe their children are on the roads. 

“It’s like having a driving coach on your shoulder,” says Savage. Meanwhile, driving schools have approached Tower looking for unique ways to use it with their clients, and Tower is considering partnerships. 

Another popular function is the leaderboard where people can select to compete against each other and in a group.

“It’s more fun when there is competition. The leaderboard shows your rank compared to others based on your average trip score,” says Savage.

Tower has recently introduced a ‘try again’ function, that allows the user to begin again straight away if their score was low and they didn’t qualify for savings. 

Research shows that 58% of drivers scored better when they tried the app again, says Savage.

Savage believes the New Zealand insurance industry is on the cusp of embracing digital innovation, and Tower is at the forefront of this change.

SmartDriver was the winner of Innovation of the Year at the 2014 New Zealand Insurance Industry Awards.

The technology, produced by US app developer DriveFactor, was a first in New Zealand and Australia.

Before launching the app, Tower monitored how customers embraced user-based insurance (UBI) overseas. UBI provides fairer pricing to customers based on their driving, not just the population at large. 

It’s great for consumers that vehicle premiums can now be determined using an individual’s driving behaviour, Savage says, rather than solely relying on averaged claims risk and demographic data such as age and location.

“This app is just the first part of a much bigger push for us to use data and technology to reach customers,” he says. 

Customers want insurance providers to not only insure risk, but to help them minimise risk. The proliferation of connected devices and the “Internet of Things” opens up new opportunities to insurers interested in meeting these needs, says Savage.

Insurers need to develop digital capabilities to meet the changing demands of their customers, Savage says, and move from simply selling products to offering experiences.

“We are ready to take advantage of innovations in our digital world that will bring us closer to our customers and give them a more connected experience tailored to their individual preferences and needs,” says Savage.