Insurers more telematics-curious after COVID-19

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Telematics policies still only account for single-digit percentages of overall auto insurance policies, according to Novarica, an insurance technology consulting firm. However, a confluence of factors are converging that might lead to a breakthrough soon.

With the top-10 personal auto carriers offering or piloting telematics, policyholder exposure is growing at the same time that more people are working at home in the wake of the COVID-19 pandemic. The latter factor is driving interest in pay-per-mile programs. However, pay-how-you-drive, traditionally discount-based, still is popular as insurers focus on driving safety broadly.

"At a high level, assuming consistent adoption rates, the telematics portion of the personal auto market should be between $22B and $32B by 2025," chief of staff Harry Huberty writes in the Telematics in Insurance: Overview and Key Issues report, based on a survey of 81 P&C insurers.

Huberty says that these factors are pushing the profile of telematics and UBI:

  • OEM partnerships where auto maufacturers assist insurers both in marketing and data collection
  • Increasing applications for sensor techology in claims and digital customer experience
  • Point-of-sale discounts enabled by APIs

"Telematics doesn’t have to become dominant to affect consumer expectations around price, convenience, and service," Huberty says. "Insurers taking a 'wait-and-see' approach to telematics should be mindful of the effect that expansion of telematics may have on their books of business as less safe drivers 'attrition out' of their competitors’ telematics programs."

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