How digital insurance can improve the online car buying experience

As attitudes shift, tech-driven insurance companies are ideally positioned to add value to online used-cars sales platforms through right-fit partnerships and robust CX-focused technologies.
Even to the most casual of observers, it is becoming increasingly clear that users are very skilled at, not only, adopting complex and expensive technologies but also performing non-routine tasks online across multiple devices.
Convenience, ease of use and mobility are overcoming learning curves.
Compared to other industries however, insurance has historically taken a more cautious approach. Reasons for this range from entrenched legacy systems and complex regulations to a belief, that the insurance buying process is simply too complex.
Whilst there is a kernel of truth to this, the undeniable fact is that things are changing and disruption is knocking at the proverbial door.
Younger, tech savvy and more mobile generations are starting to play a key role in influencing the digital agenda of players in both the retail automotive and insurance segments.
There is little argument around the fact that netizens want more connectivity, convenience and ease of use. There is also a consensus that consumers are increasingly making use of digital sources to inform their purchase decisions.
Expectations are high. The onus is on both industries to optimize end-to-end digital journeys.
At PSA, we believe in making the right insurance cover available to the right person, at the right time. This means that, for example, securing the most appropriate cover for a second-hand car bought online, should not happen in isolation from the car purchase; but in an integrated manner. Using the data generated from the purchase, or pre-purchase behaviour, the most appropriate cover can be presented and a policy created within a single optimized friction-less digital journey.
For this to happen, apart from focusing on the right technologies, we are placing the customer front-and-centre of our plans, whilst seeking to form selective and right-fit partnerships with e-commerce providers with whom to execute.

Car buying behaviour is rapidly changing

Car buyers simply don’t start their journey at the dealership anymore. They have access to a formidable amount of information online, and are increasingly taking advantage of this.
According to research by Bain & Co, more than 60% of car buyers have already decided on the brand, model and price point before visiting their first dealership.1 And whilst most vehicle buying (apart from the research and choice-set formation) remains closely linked to physical dealerships, many OEMs and tech driven companies have started to take notice.

In the UK, for example, 60% of dealers say they will have the ability to offer digital transactions within the next 2 years.2

State-of-the-art user experiences, high-quality rich media creatives, sophisticated configurators, chat bots, online bookings of test drives and volumes of relevant and engaging content are becoming the norm.
Europe is fast becoming a focal point for such investments and market testing. Earlier this year, PSA Group Chairman of the Managing Board, Carlos Tavares, told investors that he wants online sales within the group to increase to 100,000 by 2021 from 6,000 in 2018. Across the continent, manufacturers,including Hyundai, BMW and Jaguar Land Rover, have been deploying or testing digital sales programs.3
However, whilst sophisticated online configurators go a long way in improving CX, the digitization of the final purchase step, today, remains an elusive breakpoint.
This is where used cars online sales platforms may have a thing or two to teach manufacturers and dealers.

Used-cars online sales platforms seem to be a step ahead

In 2018, almost 54% of French customers owned or leased a used car, compared to 36.3% who owned or leased a new one. As shown in the charts below, various European countries follow similar patterns.4

Buying a used car, long associated with the stereotypical cheeky salesperson, is seeing its barriers slowly dismantled by modern technology and the ability of online sales journeys to capture and leverage massive amounts of data.


Buying a used car is seeing its barriers slowly dismantled by modern technology

This data collection and manipulation provides used-cars digital sales platforms the ability to leverage multi-device multi-channel strategies whilst still catering for regional, cultural and even personal preferences. It also facilitates the effective deployment of tools known to improve conversion rates such as social media and online reviews.

Advanced customer segmentation and clustering models based on a multitude of behavioural data points, highlight differences between premium buyers and buyers of less expensive models; which can be leveraged to maximise key performance metrics.
This shift from a transactional to a customer-centric model, driven in great part by customers’ need for convenience, ease and mobility is disrupting the used-car buying experience.
As revealed by McKinsey’s proprietary customer research, “online providers are beginning to dilute traditional used-car dealers’ positions and drive growth by empowering digitally savvy customers via three major capabilities: complete end-to-end purchasing, extensive vehicle data and photos and unique delivery options.5
And with a year-on-year increase in second-hand car prices, this market is ripe for further technological and CX investments.

Insurance as part of the car buying eco-system

In the 19th edition of their ‘Global Automotive Executive Survey’, KPMG describe the auto business as being “part of an open, dynamic and self-organising eco-system, consisting of physical assets, services and content.6
The service element within this eco-system is where we believe customer-centric digital insurance companies have the possibility of forming strategic alliances and adding incremental value.
By placing more focus on digitally savvy second-hand car buyers and leveraging the technological and data opportunities in digital retailing, sellers and insurers can take advantage of this growing market whilst providing a truly remarkable used-car online buying journey.
The digital nature of the core insurance product, backed by a robust technology platform that connects processes with experiences, such as APIs and automated insurance documents generation, would achieve three things:
  1. Smoothen the traditionally high-friction online insurance purchasing journey;
  2. Satisfy the need of customers for active safety around their high-value purchases;
  3. Drive up the margins for both online car sellers and insurance providers whilst providing customers with a more confident and convenient buying experience.
At PSA Insurance, we believe that the right partnerships can deliver these capabilities and prepare forward-thinking companies for an exciting and remarkable future ahead.
If you want to know more about how you can increase the revenue of your digital business by offering add-on insurance using state-of-the-art API technology, please contact us directly or book a time for us to call you. It's free and there are no strings attached.

We will be happy to contact you at a time that suits you, for a free, no-obligation consultation.

Recommended Reading
Ecommerce stores are embracing Insurance APIs. Here’s why. 26 February 2020
Increase e-commerce revenue with add-on insurance 09 July 2019
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