Building connected insurance offerings starts with customer-focused innovation at USAA

Connected insurance is primed for massive growth over the next decade, with telematics adoption leading the way.

The worldwide market for automotive embedded telematics is predicted to be $87.3 billion by 2030. Insurers are now racing to integrate telematics and IoT into their connected-insurance offerings.

USAA’s recommendations for working with customers on connected insurance include:

• Embrace the company’s inherent culture of innovation
• Create solutions to solve business problems and member needs
• Learn from all sides of the business
• Engage insureds via education and preparation to minimize risk from catastrophic events

Here’s how USAA’s innovation strategy is creating the future of connected insurance by building customer experience into their digital transformation.

Innovation as a company value

USAA was founded 100 years ago with a focus on innovation. “USAA started when 25 military officers came together because they weren’t supported in the proper ways by traditional insurance companies,” says Luke Harris, VP of Innovation at USAA. “As one of the very first military-focused startups, that innovation has carried forward throughout our history, with nearly 1,000 patents developed by employees. Innovation is embedded in USAA.”

The company built its telematics offering based on the needs of their insureds. USAA members have unique requirements: military members, many currently enlisted and serving, who may own vehicles but don’t necessarily drive a lot. Usage-based insurance pricing is growing in popularity across the industry, and for USAA, it’s not just a perk but an imperative to offer this type of solution to members. Developing connected insurance solutions that are tailored to the needs of clients is an industry-wide trend, according to Capgemini Invent’s Global Head of Insurance, Keith Gage. “Connected insurance, or insurance solutions built on IoT foundations, have been a part of our industry for some time, but driving adoption has often been a challenge. USAA’s acquisition of Noblr, coupled with its commitment to data-driven innovation and deep customer-centricity, represents an exciting new development. We see enormous potential in this space for firms that think differently and see the potential in linking risk transparency to personalized experiences.”

By acquiring telematics company Noblr, USAA was able to ramp up its usage-based insurance options to members as quickly as possible. It’s a great example of how innovation can come from anywhere – there’s no pressure to build every new solution in house.

Building to solve problems

The increasing need for organizations to adopt digital transformation can lead to innovation without any clear goals or endgame. Telematics fits seamlessly into USAA’s innovation strategy because the company goal is to create solutions that meet their members’ unique needs.

“Our innovation functions are heavily focused on leveraging data, including development of machine-learning capabilities,” says Harris. “That said, we don’t innovate just for innovation’s sake. Every innovation we develop is focused on solving a real business problem, so we can execute on mission- and outcome-driven innovation.”

One example of the company’s approach is taking on the industry trend of usage-based pricing and utilizing the generated data to power outcome-driven innovation: extending the value proposition by supporting the claims process with safety and prevention as top priorities.

“What we do is very data driven,” says Harris. “Our teams are continuously looking for ways to leverage weather data, historical seasonal data, and other information to provide trusted advice and solutions for our members. We hope to prevent losses and help save lives through integrating data into our insurance practice.”

New perspectives in the innovation space

Lifelong learning is an often overlooked yet essential part of the digital-transformation process. In the acquisition of Noblr, USAA’s innovation team had a crash course in how to think and move quickly like the startup when implementing telematics and connected insurance into insurance offerings.

“We wanted to understand how USAA’s brand equity can benefit and propel a startup like Noblr, and how Noblr’s strategic advantages can help us be more nimble and grow at scale,” says Harris. “One of the areas that we’ve learned a lot with Noblr is how to take informed risks and manage risk overall in a different way than we’re used to. A fresh tech stack pushes us to think differently about how we deploy new capabilities, and test, learn, and iterate quickly to deploy a true minimally viable product with intent to continually learn and iterate.”

The mutual learning experience has set an example for all insurers, especially large and legacy organizations, as they build out their innovation strategies.

Working with people

By combining telematics with USAA’s unique insurance offerings, the company can deliver a complete suite of products that solves the needs of their members. USAA offers insurance as well as financial services, which allows for a more natural flow of customer data to USAA and ultimately makes its digital transformation more seamless and intentional. The trusted relationship between insurer and members helps advance USAA’s digital transformation.

“Delivering value-added services beyond insurance is proving the benefits of consumers sharing their data safely,” says Harris. “We’re seeing customers become more willing to share their data with trusted organizations like USAA.”

Harris points to the education that USAA shares with its members to help them understand the benefits of sharing data with an insurance provider, as well as how USAA integrates that data into its holistic customer experience strategy.

“One of the industry challenges with telematics-based products and offerings is customer awareness,” says Harris. “Auto insurance has been a traditional offering for most of the industry’s existence. As people are wanting to learn more about telematics and IoT, we’re seeing higher adoption. This adoption will only increase as we in the industry provide education and awareness of these connected-insurance product offerings.”

The future of connected insurance

USAA built its presence as an innovator with unique products in the insurance industry. The innovation team is looking ahead to growing the connected insurance offering by investing in IoT within the homeowner and life-insurance spaces. Harris brings it all back to creating insurance products for people and their human needs.

“It’s not just about properly reading risk and offering competitive prices,” he says. “It’s more about providing the trusted advice that our members expect, helping our members prepare for events and, in many cases, prevent losses from occurring.”

The insurance industry can find inspiration for digital transformation from how USAA continuously innovates with customer-focused products at the forefront.