Young drivers are extremely enthusiastic about Usage Based Insurance (UBI) and brokers will have to use new strategies and telematics to attract more customers, according to data contained in a survey of U.S. drivers conducted in July 2015 by Towers Watson.
In the United States, Millennials are a large and diverse demographic and believe that UBI offers a more effective way of calculating premiums. According to the survey, most millennials own smartphones (92%) compared to other demographics (58%). This means that insurance companies and brokers have to embrace modern technology and adapt their strategies to appeal to younger drivers – who rely on mobile devices and the internet to access information.
Most millennials (72%) prefer UBI to traditional auto insurance and a large percentage (51%) also expressed an interest in using an app or a device to check their discount before actually buying a policy. This attraction to UBI could be explained by the fact that millennials are more open to trying out new technologies and solutions.
The influence of technology in the decision-making habits of this demographic becomes even more apparent when other numbers are considered. For example, compared to other survey participants, millennials are more willing to participate in UBI through an existing app (88% v 81%), by downloading a new app (92% v 81%) or through a Satnav device (90% v 83%).
Interestingly, younger drivers are also more willing to change their driving habits (84% v 53%), if it means getting a discount. 84% felt that to get a discount, careful driving is a fair measure. Behaviors people are willing to change include keeping a safe distance from the vehicle in front and sticking to the posted speed limit. Interestingly, only 29% said that they would avoid phone use while driving, even if it could lead to lower premiums.
Compared to other respondents, millennials are also more willing to pay for value-added services (90% v 65%). Attractive value-added services include breakdown notification, automated emergency call and theft tracking.
For insurers, high interest in UBI among millennials is an interesting opportunity. While consumers of all ages are interested in the product, the younger generation can boost growth. But, to get tangible results, insurers need to harness the power of technology and spread awareness.
There is enormous potential for growth, if insurers are willing to use telematics to attract customers, especially millennials who are already open to adopting UBI. By analyzing various parameters to predict driver behavior et al, insurers will be able to provide more discounts and personalized service to their customers.
