How would you feel about letting your automobile insurance provider embed a device in your car that watches how you drive, then determines whether your on-the-road behavior merits a discount?

A large number of U.S. drivers call that a good deal. They’re comfortable with usage-based insurance (UBI), finds a new survey released today — just in time for the Insurance Telematics 2014 conference in Chicago — by professional services company Towers Watson. In fact, nearly 80 percent of the 1,000 respondents surveyed by the research firm said they would either buy a UBI policy or consider the concept. That number rises to 88 percent of all drivers, if they were guaranteed that the UBI policy would not raise their insurance premiums, the survey finds.

While those figures are essentially unchanged from a year ago, they’re now translating into real business growth. The number of consumers who actually purchased a UBI policy has nearly doubled in the last year and a half, according to the market researcher; it says 8.5 percent of U.S. drivers held a UBI policy as of this past July, up from 4.5 percent in February 2013. In part, that’s because UBI policies are now available in all 50 U.S. states. “Clearly, UBI continues to gain steam in the marketplace,” says Robin Harbage, global lead of the UBI practice at Towers Watson. “The value proposition is resonating with consumers.”

Privacy concerns around UBI, which one might suspect would be an obstacle, have in fact lessened. In the Towers Watson survey, only 35 percent of consumers said they would feel uneasy about letting their auto insurer monitor their driving; that’s down significantly from 42 percent a year earlier. Harbage suggests that behind these findings are signs of the challenging economy. “Consumers,” he says, “are learning that UBI can offer many benefits, including lower monthly premiums, which outweigh their privacy concerns.”

A much bigger concern among consumers is the threat of higher premiums due to UBI, Towers Watson finds. Nearly half those surveyed said they worry about this. Most insurers are already responding, Harbage says, by promising that UBI technology will never be used to deliver surcharges.

Smartphones — or rather, consumers’ lack thereof — presents one surprising snag for UBI programs. Most UBI programs today monitor driving behavior with a second-generation OBD-II (on-board diagnostics) device, a small unit that plugs into a port under the car’s dashboard. But in the survey, 80 percent of consumers said they’d be willing to let their driving behavior be monitored by an app on their smartphone, which would great simplify the process and reduce its cost. The problem, however, is that slightly more than a third of the respondents say they do not carry a smartphone. “There’s a tremendous opportunity for insurers that can figure this out,” says Len Llaguno, a senior consultant at Towers Watson.

Even those consumers who do have smartphones worry about UBI apps draining their phones’ batteries. Fewer than 40 percent of respondents to the Towers Watson survey say that a noticeable drain on their phone batteries would be acceptable. Conversely, slightly more than 75 percent said that if the battery drain were so moderate that it did not affect daily usage, they’d find that acceptable.

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