More than one-third of consumers are willing to try UBI, according to the report. While there was a spike and subsequent slight drop in interest in UBI, the interest is not likely to drop below pre-pandemic levels, said Lajdziak.
J.D. Power has been collecting data on customers’ use, interest and reservations toward telematics in the Auto Insurance Study since 2016, said Robert Lajdziak, senior consultant at J.D. Power. The study asked customers if they are aware of telematics offerings or have participated in telematics. Customers who are aware of telematics but have actively avoided them are also recorded.
“From 2016 to 2020, there was essentially a set pool of customers that had interest in it, and they were either actively participating or considering participation,” said Lajdziak. “And the previous dynamic was, if usage increased slightly, the interest would go down, because it was just a single pool of customers that could fit in one of those buckets or the other. What we see today is that both the interested parties and the actively using parties have both increased.”
Over the course of the pandemic, customers likely realized that they could save money with UBI, said Lajdziak. Insurance companies were already giving out refunds because the risk had lowered with decreased driving, “but customers were largely stuck at home,” he explains.
“They looked at their vehicle in the garage, and they know, based on the carriers providing refunds, that there's less risk because they're not driving as much,” he continues. “And that really shifted their thoughts on the value proposition of telematics and not driving as much: ‘Perhaps I can pay a lot less for my insurance because I'm not driving to work or I'm not doing that daily commute. I'm not even going to as many events. And my car's basically sitting there idle and maybe my rates will go down for telematics.”
Among customers who are still not using telematics, concerns over insurance companies monitoring customers’ phones and concerns about being labeled a “bad driver” with increased rates remain.
Looking ahead, insurance companies can help grow their use of telematics through increased communication with the customers, said Lajdziak. Often, insurance customers are not aware of offerings by their company outside of when they first signed up. Other consumers have voiced their interest in other value propositions, such as monitoring teen drivers, tips on vehicle maintenance and tips on safe driving.
For the consumers that are worried about their rates going up, Lajdziak said that insurance companies should clarify what is actually being measured. Most rates do not go up on account of telematics, he said.
“I think the core to that question is a catalyst for consumers to understand why it's not necessarily intended to be a punishment or a stick, rather a carrot. Most consumers don't get an increase,” said Lajdziak.
