Buyers have historically viewed usage-based insurance (UBI) as a way to get rewarded for their safe driving habits with reduced premiums. But a new study from LexisNexis indicates that the driving data generated for UBI can itself be of value for consumers—especially those with teen drivers in their households.
According to the study, 45 percent of consumers are interested in UBI offerings that will keep them informed about the driving habits of those covered on their policies. That’s up 12 percent from 2013. Consumers are also showing increased interest in other value-adds associated with vehicle telematics — including automatic crash response, emergency roadside assistance and stolen vehicle tracking.
The study also revealed that consumers are not especially resistant to giving their insurance companies access to driving data generated by their vehicles. In fact, consumer comfort levels for sharing UBI driving data are in line with those for sharing online banking data—and higher than those for sharing personal data derived from search and social media.
One out of every three consumers expressed interest in mobile UBI offerings that would allow them to leverage vehicle telematics using smartphone apps.
“Smart devices, smartphones and smart cars are converging to create what should be a smart insurance choice for safe drivers and their insurers,” says Ellen Carney, a Principal Analyst at Forrester Research specializing in insurance eBusiness. “What is surprising is how few U.S. consumers have actually bought it.”
While value-added UBI policy attributes may pique consumer interest, the discounts insurance companies are able to offer under the UBI model still exert the strongest appeal. 63 percent of study respondents said they would consider a UBI policy that offered a 15 percent premium discount, while 54 percent said they would do so at a 10 percent discount and just 30 percent said they would do so at a 5 percent discount.
That 30 percent response, however, is up significantly from 23 percent last year—indicating that consumers are more open to policies that offer lesser discounts.
On the commercial side, the UBI market profile appears quite different. Seventy-three percent of fleet managers say cost savings are extremely important to them when it comes to auto insurance, which explains why 68 percent of fleet managers responding to the survey expressed interest in UBI offerings.
On the other hand, telematics-enabled fleet management value-adds only pushed that number up to 69 percent —indicating that fleet managers care less about those value-adds than their consumer counterparts. Among the reasons given by fleet managers for their greater indifference were no perceived need for the data (31 percent), additional cost (20 percent), potential complexity (12 percent) and privacy concerns (11 percent).
Insurance companies have plenty of opportunity to sell their UBI offerings to fleet managers. Sixty-seven percent say they shop for a new policy every two years, and 48 percent have been with their current carrier for five years or less. The study also reveals that 72 percent of fleet managers would be more receptive to a carrier’s UBI offering if it was offered with a 90-day trial period.
“Fleet managers are looking for ways to save money,” said Ernie Feirer, Vice President and
General Manager, Commercial Insurance, LexisNexis. “This is a huge opportunity for carriers offering UBI.”
