Personalizing insurance options for auto rentals
Personalizing insurance options for auto rentals | Insurance Business Canada
Motor & Fleet
Personalizing insurance options for auto rentals
Bringing embedded insurance options to the rental economy
Motor & Fleet
By
David Saric
When Roam and Onlia announced a partnership, it was with the intention of bringing different and more personalized insurance options to the automobile rental economy, specifically the subscription service model.
“With the subscription service, I think the main complaint you have is everyone pays the same insurance, which doesn’t take into account their driving behaviour or their driving record,” said Fernand Vartanian, general counsel & head of business development, as well as co-founder of Onlia.
“What we’re trying to do is basically bring insurance to the point of sale of anything. Not only do you get access to a car, but you also get access to a personalized insurance rate at the point of sale.”
During an interview with Insurance Business, Vartanian joined Roam’s founder Apoorv Gupta, and its general manager Duncan McCall, to speak about how consumer demand is encouraging more personalized rental options. They also discussed the many benefits of having access to an API.
Changing consumer demand
Amid a tight auto market, there has been a gradual letting go of the financial burdens posed by owning a car.
“Most manufacturers know that vehicles are only driven for 5% of their life. And what that means is a majority of the time, when you have that vehicle, it’s just sitting in your driveway,” said Gupta. “When you add up that time when you’re paying for insurance and to own or lease the car, you’re overpaying for something you’re not using.”
Vartanian explained how he has noticed that more and more people are not looking for long term commitments on automobiles. Instead, consumers are opting to have more freedom and flexibility with what they are spending their money on.
“If people are sort of wanting the freedom and the flexibility for transportation, we’re going to have to pivot for how we as an industry will meet that demand,” Vartanian said. “The yearly insurance model and early cancellation fees, if you find that you don’t use it for a year, will become archaic.”
Bringing choices to a wider customer base
As a vehicle rental service, Roam is used by a variety of immigrants or expats who need transportation for work or other commitments.
“In most parts of Canada, it is very important to have a vehicle in order to get around,” McCall said. “For new Canadians, purchasing a car is a challenge because they don’t have the credit history, they haven’t built the banking history.”
With the country expected to welcome nearly half-a-million people in the next year, this creates significant barriers to assimilate in the Canadian lifestyle.
With an embedded insurance offering, people are able to procure a rental vehicle with the value of having an insurance product written into the rental agreement.
“At Onlia, we also recognize driving records from a foreign jurisdiction, which makes it easier to price insurance properly, unlike traditional insurance, where you’re basically treated like a new driver,” Vartanian said.
Tapping into the benefits of an API
According to IBM, an application programming interface (API) “acts as an intermediary layer that processes data transfers between systems, letting companies open their application data and functionality to external third-party developers, business partners, and internal departments within their companies.”
This effectively breaks down silos that make it more difficult to collaborate and innovate between multiple entities.
Vartanian and the people at Onlia had already put the time and energy into creating an API, which allowed its partnership with Roam to happen seamlessly.
“We’re able to access their pricing engine and pull out the quotes for our customers and bind it at the same time,” Gupta said.
Embedded insurance products like these have the ability to penetrate the automobile industry at large, especially for those looking to purchase a vehicle to own.
“Imagine, right when you’re at the point of finalizing your car, the insurance is already there,” Gupta said.
“It’s done. The quote’s there, the dealership already has it, and you literally just drive away, you don’t have to worry about that headache that usually happens later on when you’re trying to finding an insurance policy.”
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