With market growth for usage-based insurance plateauing, parents of teen drivers and the elderly offer new avenues for carriers to leverage for a much-needed lift in business, according to a study by LexisNexis Risk Solutions.
In its annual Usage-Based Insurance report—measuring overall market awareness—the researcher found a four percent increase among individuals aged 55 to 64. Participants aged 45 to 54 made the biggest leap year-over-year at six percent, according to the report. However, younger drivers ( 21 to 25) still pose the strongest market interest at 49%, compared to 42% for previous groups mentioned. A sample size of more than 4000 U.S. consumers was used for the study.
“There are more parents with kids getting to be driving age,” said David Lukens, director of telematics at LexisNexis. “We are also starting to see interest from loved ones concerned about how their elder relatives drive.”
Overall market awareness witnessed a slight uptick in 2016, but remains relatively flat, Lukens said. Customers are searching for alternative benefits to signing up for UBI besides premium discounts. At least 60% of consumers said they would be more interested in UBI if they earned a decrease on deductibles, received roadside assistance and had driving monitored through safety messaging, the study found.
“Premium discounts haven’t lost their edge. It’s still a powerful message for parts of the market. It just doesn’t appeal to everybody,” Lukens said. “Targeting price is not the most optimal approach for all companies. Look for other things that appeal to customers.”
Other key findings include growth opportunities in social media marketing and offering telematics programs to customers directly. Only one in five consumers acknowledged their insurance providers gave them a chance to enroll in a UBI program when contacted, according to the study. Additionally, 40% of those surveyed said they wouldn't participate unless someone they knew did first, opening the door for insurers to connect drivers through social media, LexisNexis found.
