The AA recently announced plans to offer its customers a new Smart Breakdown cover service that can detect problems ahead of time. While this service is an improvement over current offerings, its real value stems from the long-term implications.
The AA’s Smart Breakdown cover will utilise a plug-in device that reads essential vehicle data and transmits that information to the driver via the AA app. The driver is then notified about issues that could lead to a breakdown and given actions that could be taken to prevent it. If a breakdown does occur, a patrol can be dispatched to the location with the part required to fix the problem on the spot – potentially saving consumers considerable time and distress.
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While this offer is enticing on paper, it is unlikely to have an immediate impact. According to GlobalData’s 2018 General Insurance Consumer Survey, 56% of UK drivers have breakdown cover either with their insurance policy or through a separate product. Of those, only 4.6% hold their breakdown cover with the AA. And due to the higher cost of Smart Breakdown – and privacy concerns some drivers may have with this new product – uptake will be limited.
However, the real value in this move arises from the data and experience the AA will gain working with these connected devices. As cars become more connected, devices similar to those used by the AA will be fitted into cars as standard. These devices will provide vast volumes of data that insurers and car manufacturers will need to analyse in order to extract value.
When this future comes to pass, the AA will be well positioned to leverage the insights it has already gained through the data it collects from its breakdown device. So while the service may struggle to gain traction among consumers in the present, it could offer significant benefits to incumbents in the future.
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By GlobalData
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