Inflation increases auto telematics adoption, TransUnion

Since the end of the last quarter of 2021, consumer use of auto telematics has increased by 33% as a result of economic inflation, according to the Personal Lines Insurance Shopping Report published by TransUnion. 

Compared to a previous survey from November 2021, a new survey of over 2,000 consumers conducted between February and March of 2022 discovered that the percentage of those who received an offer of auto telematics increased from 32% to 40%. The survey also found an increase in customers that chose to adopt a telematics policy, with a rise from 49% to 65% – suggesting that some consumers are gradually overcoming fears of surveillance in hopes of reducing premiums.

“The industry is kind of ripe for this,” says Michelle Jackson, senior director of TransUnion’s personal property and casualty insurance business. “Prices are going up across the board and telematics have been in the market as a way to potentially offset your insurance premium for good behavior and good driving."

The report suggests that this great surge in telematics adoption occurred in such a short time frame due to inflationary pressures and rising premiums from insurance carriers. Auto insurance costs are trending at a 4.3% increase on average, according to S&P Global Market Intelligence research referenced in the insurance report, with some states showing prices up almost 20%, such as in Arizona, Georgia and Texas. 

A persistent rise in gas prices may also alter consumer perception and behaviors in shopping for auto insurance, the report notes. While many workers have the ability to work from home, high gas prices will likely motivate workers to continue their remote work in order to drive much less. This could impact how consumers shop for their auto insurance, especially when considering auto telematics to monitor driving habits, in order to reduce premium prices. 

The report also finds that, although property insurance shopping rates remained very high throughout 2021, those rates dipped in the first quarter of 2022. This likely results from the increase in mortgage interest rates and increased home prices – leading to less home buying and, therefore, less shopping for property insurance. 

There could be potential for new technologies, similar to auto telematics, for consumers’ homes and property insurance. Typical home devices such as thermostats, smoke detectors or CO2 detectors could very well be used to monitor and reward good behavior and maintenance in the home. 

As inflation is expected to continue throughout 2022, consumers are left to wonder what to anticipate within the auto and property insurance markets. Carriers will likely continue to increase rates to adjust to rising loss costs, weather events, inflation and supply chain issues. 

“There doesn't seem to be a solution to inflation in the near term… it'll be interesting to see those other factors that consumers are looking for like better coverage, better service, better experiences, a telematics program if you want it – for the consumers that do –  and having those offerings to position [insurers] to those variety of consumers and what they're looking for,” Jackson says. “It will be interesting to see this play out over the next couple of quarters.”