Many consumers have been accepting the use of data from their car to reduce insurance costs but only a few consumers are using the technology when it is available, according to a recent study.
Two-thirds (67%) of drivers knew their vehicles could record and send telematics data, according to a recent LexisNexis survey. Only 22% used their data to discount insurance, but of those who did not use data to discount, 71% said they would be willing to do so. Telematics communicates through consumers’ smartphones or in-car apps.
LexisNexis analysts say the cancellation is a lost opportunity not only for insurance companies but also for the auto industry.
“Insurance is the largest contributor to the total cost of car ownership for consumers,” according to the report. “Automakers are looking to improve cost of ownership and the customer experience by leveraging on-the-go and driverless auto insurance (UBI), such as Pay-As-You-Drive (PAYD) and Pay-How-You . -Driving (PHYD). Reducing insurance premiums can go a long way in making car ownership affordable, benefiting both consumers and car manufacturers.”
The technology is becoming more readily available as 5G networks roll out across the country, providing greater bandwidth to “unleash the new potential of the digital ecosystem,” according to the report.
The technology has become cheaper and more efficient, leading to greater adoption, according to researchers. But now it’s hard work and education.
“Educating consumers on how to use their telematics data through your connected app helps bridge the gap between consumer interest and UBI participation. [usage-based insurance],” the researchers wrote, speaking to the automaker.
The plague takes and gives
Although driving decreased significantly at the beginning of the COVID pandemic, the adoption of telematics increased significantly, according to a recent JD Power survey of satisfaction with US auto insurance customers.
His research found a significant year-on-year increase in consumers adopting telematics for insurance rates, with 16% of drivers using UBI, which was used twice in five years. More than a third (34%) in the JD Power survey said they were interested in using telematics for UBI.
When people use UBI, they tend to save money, and price satisfaction among those customers is 59 points higher than all customers.
A TransUnion study released in May showed that inflation is driving UBI adoption, with a 33% year-over-year increase in consumers who accepted offers from their insurance provider to use telematics.
Compared to the previous survey in November 2021, the number of customers who ordered telematics to control driving and help set prices increased from 32% to 40%, and the number of recipients increased from 49% to 65%.
Michelle Jackson, chief executive of transUnion’s property and casualty business, said the high acceptance rate was due to lower prices.
“It’s clear that inflation is affecting consumers’ wallets, and many people are now thinking about new technology that will help them save money,” Jackson said. “In the insurance industry, many consumers are beginning to use telematics tools to improve efficiency and reduce costs.”
He said the approval could be extended to other products and businesses that are damaged, such as equipment connected to buildings for fire detection, water leakage and other hazards.
How can you stimulate interest?
LexisNexis researchers had advice for automakers to help accelerate the adoption of telematics and UBI.
– Create awareness of insurance discount opportunities and educate consumers about the benefits they can have by participating.
– Provide a seamless way for customers to take action and join the program connected to their system.
– Partner with a well-managed telematics exchange to create an opportunity for consumers to purchase insurance using their vehicle information.
Steven A. Morelli is a contributing editor for InsuranceNewsNet. He has over 25 years of experience as a journalist and editor for newspapers and magazines. He was also vice president of communications for an insurance company. Steve can be found at [email protected]
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