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Reinventing insurance customer experience for loyalty

Collaborating on the auto insurance customer life cycle

OEMs are facing eroding loyalty, and the auto insurance customer experience is one big reason. It also represents an opportunity. Learn why collaboration among OEMs, insurers, and captives is the path toward drawing in and keeping customers. Explore four OEM–insurer partnership archetypes and learn which companies are already collaborating.

Declining customer loyalty—and the opportunity to create a seamless insurance customer journey

Congratulations! You’ve just bought a car. Prices haggled, papers signed, hands shaken. But don’t get too comfortable basking in “new car smell”—you still have to sort out your insurance. Instead of driving right off the lot, it’s not unusual to spend half a day at the dealer orchestrating insurance and financing transactions.

The fragmented auto insurance customer experience is only one of many kinks in the value chain that prevent original equipment manufacturers (OEMs) from locking in customer loyalty—which reached an eight-year low in 2023.

But this also represents an opportunity: By spearheading partnership around a more seamless insurance customer journey, OEMs and their captives could create a mutually beneficial relationship with insurers and customers to build loyalty, boost profitability, and define the future to secure competitive advantage—before electric and autonomous vehicles force change upon the industry at large.

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Automated driving: The elephant in the garage for the insurance customer experience

On top of declining loyalty, the future of mobility raises considerable implications for auto insurance and liability. If OEMs, captives, and insurers don’t start collaborating around a new insurance customer experience now, they could risk taking a backseat to regulators, new market entrants, and competitors.

Based on the International Energy Agency’s (IEA) Stated Policies Scenario in its Global EV outlook 2024, every other car sold globally in 2035 is set to be electric, given today’s energy, climate, and industrial policy settings.¹ From 2022 to 2023, permitted autonomous vehicles in California test-drove a record 9 million miles, more than a third of which were driverless, according to the California Department of Motor Vehicles.²

From there, it’s easy to see a future where most cars are fully electric and autonomous, as car companies continue to strive toward what General Motors coined as a “zero crashes, zero emissions, and zero congestion” world.³ Once highways are filled with autonomous cars, human-operated cars will likely go the way of the horse-and-buggy.

Joining the mobility–insurance value chain now could give OEMs, captives, and carriers a chance to dictate how change happens and secure market share and competitive advantage as the future of mobility unfolds.

Other forces of change

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New market entrants

In any customer experience, if you don’t solve the points of friction, someone else will. Entering the automotive value chain are several unusual players, including the likes of NVIDIA and CISCO to improve in-cabin and connected experiences across the vehicle and customer life cycles.

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More cost-effective electric vehicles

As more people adopt electric vehicles (EVs), customer expectations for connected experiences will likely rise as a result. OEMs have an opportunity to captivate early adopters within their walled gardens.

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Data ethics and consumer trust

While EVs can generate thousands of data points about customer behavior per second, the New York Times states there is increased scrutiny around the ethics of collecting and sharing that data. OEMs, captives, and insurers need to prioritize the ethical treatment of data-sharing as a foundational element of insurance customer experience transformation.

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Focus on the entire insurance customer life cycle: Building a ‘walled garden’ experience

To recapture loyalty and stay competitive, OEMs should seek to create a cradle-to-grave loyalty experience with each car—a walled garden of helpful services and interactions that span multiple customer and asset life cycles to keep people within the brand ecosystem. The payoff? Increased customer lifetime value and profitability: Research by Deloitte shows that managing a vehicle asset across multiple life cycles can be 1.4 to 1.6 times more profitable than the traditional one-time sales model.⁴

Collaboration: A pathway to loyalty

To offer customers a seamless and compelling experience across their life cycles, OEMs, captives, dealers, and carriers should consider integrating personalized insurance offerings into a set of streamlined purchase, leasing, and repair processes that incent customers to stay within the brand. Collaboration could allow insurers, OEMs, and captives to banish pain points and invent new, desirable outcomes for customers—effectively building a one-stop shop through undeniable convenience.