More insurance providers are accepting telematics-based insurance underwriting to capture and analyze data from the customers’ actual driving. For customers, these programs can help lower insurance rates and promote safe driving—two key factors in customer retention and acquisition.
According to a new report for Corporate Insight, “Plug-Ins Receive a Road Test—Tracking Telematics Programs,” the programs reviewed received overall positive reviews from customers. The report is based on drivers’ experiences; participants volunteered for a trial period use of a telematics program and allowed Corporate Insight the ability to directly view telematics online.
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The report, authored by Corporate Insight analyst Lauren Roncevic and part of the firm’s P&C Insurance Monitor program, examines the telematics user experience for two firms: Progressive and State Farm. Roncevic specifically analyzed the enrollment process, driving experience, trial conclusion and the participant’s overall opinion of the telematics service.
According to the report, telematics services enable drivers to plug in a small device in their vehicles to track their driving habits, including hard braking, rapid accelerations and sharp cornering. This provides customers the opportunity to demonstrate safe driving behaviors to earn a policy discount.
The study found that overall, the participants has a positive experience using the telematics services from Progressive and State Farm. One of the participants is still participating in a telematics program to maintain its policy discount and roadside assistance, while the other completed the trial and did not receive any savings. The study found—based on the participants’ experiences—that there are similarities but also several differences in the insurance companies’ services and communications with the drivers.
Generally, the participants were less happy with interruptions, alerts and interaction with the actual devices. One participant, for example, found the device “overly sensitive.” But the participants did like weekly updated provided by the insurance programs.
Progressive’s Snapshot program is an automated 30-day trial available to both existing clients and non-clients. The plug-in device is programmed to beep during risky driving behaviors like hard braking. On one occasion, the participant received an alert for hard braking even though, according to the participant, it was to avoid hitting a kid running into the street. While considered a “safe” driving habit and common driving occurrence in urban areas, the firm still determined this as an unsafe practice and lowered the user’s performance score.
Progressive sent weekly email updates about the driver’s current projected savings. The Snapshot site features real-time driving data, performance grades and badges for various milestones. The Snapshot program does not require customer service representative communication, and there is no follow-up with the prospective client regarding purchasing a policy. While the participant did not receive any sort of discount, the firm could easily have worked with the consumer to potentially find other avenues for savings, such as bundling or a good driver discount for a lower insurance rate than its competitor, according to Corporate Insight. The participant is no longer enrolled in the telematics program.
State Farm’s In-Drive service falls under a larger telematics program umbrella, called Drive Safe & Save. Its dedicated site is more comprehensive than Progressive’s, Corporate Insight says. It features a collection of driving data and valuable resources and also offers two other options OnStar and SYNC with enrollment qualifications based on state of residency and type of vehicle. The In-Drive service contains three tiered packages Connect, Guardian and Co-Pilot which provide levels of features. The participant featured in the study chose the Guardian status upgrade, which provides vehicle diagnostics, mileage information and State Farm and emergency service assistance.
The State Farm participant received monthly diagnostic email reports detailing mechanical status, miles per gallon figures and service reminders. Service reminders via email or text for oil/filter and tire rotation, as well as alerts for engine lights, speed and location, were also sent. During the trial, the participant received an email alert notifying them that their car’s lights were still on, which the client liked.
The participant ultimately received a $43 discount based on the current six-month policy term (roughly 5 percent) from the In-Drive trial. The driver continues to be enrolled in the program (with the plug-in device installed) and maintained his State Farm policy.
