More auto insurance customers are ready to try telematics, giving insurance agents an opportunity to grow their business and enhance relationships, according to a new report from insurer Nationwide.
The firm commissioned Edelman Intelligence to conduct an online survey of 1,600 U.S. independent insurance agents, mid-market business owners with fleet vehicles, and general consumers in June 2020. It found that while two thirds of consumers (65 percent) said they would allow a telematics device to capture their driving behavior if it provided a discount, only 10 percent of consumers report actually using one.
The survey identified three key themes that shed light on consumer viewpoints regarding telematics and how personal lines agents can provide trusted counsel to their clients about the subject.
First, consumers need to be educated on telematics, because many don’t know what it is or why they should consider using it. Only about one quarter of consumers (27 percent) say they know what telematics is, and half of those surveyed (51 percent) say a lack of knowledge is the key barrier to using telematics.
Second, many consumers’ privacy concerns dissipate after learning they can get a discount. Usage-based insurance programs use driving data to determine whether drivers qualify for a safe driving discount on auto insurance and can provide feedback to help drivers make even safer driving decisions, the study notes. However, 62 percent of consumers have privacy concerns about the information telematics is capturing.
The survey showed that this barrier can be easy to overcome with conversations about telematics discounts. Many consumers say they would allow a telematics device to capture their driving behaviors if it provided them a discount.
The third key theme is that there are misconceptions about the cost and savings associated with participating in telematics. One quarter (24 percent) of consumers who don’t currently use a telematics device think there is an added cost to using one, and more than half think using a telematics product could make their rates go up.
This emphasizes opportunities for carriers to inform agents and their clients about how usage-based insurance works, the report says.
“It’s important to note that two-thirds of consumers are willing to try telematics if provided a discount,” said Teresa Scharn, vice president of product development, personal lines at Nationwide. “The agents that can help their clients understand usage-based insurance options will definitely have an advantage moving forward.”
Nationwide has seen 35 percent of new auto business choosing one of the firm’s usage-based insurance programs since March, Scharn says. Nationwide expects the trend in usage-based insurance to increase drastically over the next five years, projecting 70 percent or more of new business to come from its usage-based insurance programs, she says. The pandemic has accelerated the effort to meet those projections, she says.
About two thirds of consumers have not discussed telematics with an insurance agent, and 40 percent of agents don’t feel knowledgeable enough to speak on telematics to counsel clients.
Agency owners might feel well versed in telematics, but their staff is less confident, according to the survey. Nearly 80 percent of principals feel they provide employees enough resources, and 63 percent of producers say they are provided some or plenty of resources. But only 32 percent of customer service representatives say they are provided some or plenty of resources.
“Insurance is typically viewed as a commodity, but customers want something they can control,” Scharn said. “Agents have an awesome opportunity to offer something unique that can differentiate them from other agents and direct competitors.”
