Survey Reveals Growing Consumer Acceptance of Telematics Solutions

Consumer acceptance of telematics technology in auto insurance is on the rise, presenting significant opportunities for insurers who can cater to tech-savvy drivers seeking personalized pricing and services.

According to a recent survey by the global insurance think tank IoT Insurance Observatory in collaboration with the mobility data and analytics company Arity, a remarkable 82% of policyholders view telematics apps positively. The survey reveals that 60% of respondents are open to switching to usage-based insurance, while 52% are willing to share their driving scores in exchange for personalized pricing.

Research indicates that telematics apps can enhance the competitiveness of auto insurers by appealing to forward-thinking drivers eager to save. Adoption rates are notably high among younger users, with 66% of respondents already having their insurer’s app installed. This trend underscores a growing desire for premiums that align with individual lifestyles and actual driving behaviors, rather than generalized statistics.

Customers are increasingly open to having their driving assessed through a driving score, which can be leveraged to obtain personalized pricing. When consumers recognize the tangible benefits of these scores—such as discounts or rewards—they are more inclined to share their driving behavior data.

Survey respondents expressed a strong interest in the following services:

• Rewards for safe driving (45%)
• Emergency assistance, such as crash detection (43%)
• Anti-theft features (37%)

When it comes to pricing models, preferences varied among respondents:

• Traditional: 24%
• Tailored renewal (no surcharge): 23%
• Monthly change: 16%
• Fuel cashback: 13%

Interestingly, older generations are becoming more receptive to telematics. Although survey participants over 50 years old initially showed more resistance, this has decreased from 36% to 29% since 2022. Older respondents tend to prefer familiar pricing models, with 29% of Baby Boomers and 40% of Traditionalists opting for traditional plans. In contrast, younger users are more inclined toward dynamic models, with 20% of Gen Z and 18% of Millennials favoring fuel cashback options.

• 1% of respondents (among those with a positive opinion of the telematics app and open to switching policies) indicated they would use a preexisting driving score to obtain a personalized insurance price.
• Only 16% preferred a flat 22.5% discount for the first coverage period.
• 4% of survey participants were indifferent, suggesting they could be influenced by effective messaging or incentives.
• 76% of respondents are willing to pay at least $5 per month for enhanced services.
• Dashcam-based assistance services, similar to those offered by personal auto carriers in Japan, are particularly appealing.
• 43% would pay $9.99 per month for such services, and this figure rises to 56% if the service is discounted to $4.99 per month.

While telematics offers new avenues for discounts and rewards, its value extends beyond pricing. Research suggests it can facilitate value-added services like roadside assistance.

These consumer trends indicate a market ripe for personalization, added value, and innovation. Insurers who take proactive steps now will not only meet consumer expectations in the short term but also establish themselves as leaders in the evolving landscape of auto insurance.

Topics
Trends

Consumer acceptance of telematics technology in auto insurance is on the rise, presenting significant opportunities for insurers who can cater to tech-savvy drivers seeking personalized pricing and services.

According to a recent survey by the global insurance think tank IoT Insurance Observatory in collaboration with the mobility data and analytics company Arity, a remarkable 82% of policyholders view telematics apps positively. The survey reveals that 60% of respondents are open to switching to usage-based insurance, while 52% are willing to share their driving scores in exchange for personalized pricing.

Research indicates that telematics apps can enhance the competitiveness of auto insurers by appealing to forward-thinking drivers eager to save. Adoption rates are notably high among younger users, with 66% of respondents already having their insurer’s app installed. This trend underscores a growing desire for premiums that align with individual lifestyles and actual driving behaviors, rather than generalized statistics.

Customers are increasingly open to having their driving assessed through a driving score, which can be leveraged to obtain personalized pricing. When consumers recognize the tangible benefits of these scores—such as discounts or rewards—they are more inclined to share their driving behavior data.

Survey respondents expressed a strong interest in the following services:

• Rewards for safe driving (45%)
• Emergency assistance, such as crash detection (43%)
• Anti-theft features (37%)

When it comes to pricing models, preferences varied among respondents:

• Traditional: 24%
• Tailored renewal (no surcharge): 23%
• Monthly change: 16%
• Fuel cashback: 13%

Interestingly, older generations are becoming more receptive to telematics. Although survey participants over 50 years old initially showed more resistance, this has decreased from 36% to 29% since 2022. Older respondents tend to prefer familiar pricing models, with 29% of Baby Boomers and 40% of Traditionalists opting for traditional plans. In contrast, younger users are more inclined toward dynamic models, with 20% of Gen Z and 18% of Millennials favoring fuel cashback options.

• 1% of respondents (among those with a positive opinion of the telematics app and open to switching policies) indicated they would use a preexisting driving score to obtain a personalized insurance price.
• Only 16% preferred a flat 22.5% discount for the first coverage period.
• 4% of survey participants were indifferent, suggesting they could be influenced by effective messaging or incentives.
• 76% of respondents are willing to pay at least $5 per month for enhanced services.
• Dashcam-based assistance services, similar to those offered by personal auto carriers in Japan, are particularly appealing.
• 43% would pay $9.99 per month for such services, and this figure rises to 56% if the service is discounted to $4.99 per month.

While telematics offers new avenues for discounts and rewards, its value extends beyond pricing. Research suggests it can facilitate value-added services like roadside assistance.

These consumer trends indicate a market ripe for personalization, added value, and innovation. Insurers who take proactive steps now will not only meet consumer expectations in the short term but also establish themselves as leaders in the evolving landscape of auto insurance.

Topics
Trends