Insurance agents in the personal auto space will need to navigate two divergent trends as some Americans embrace telematics offerings and a separate, growing number are more concerned with maintaining privacy from their insurance companies.
One on hand, the vast majority of young drivers (72%) prefer telematics and usage-based insurance to traditional auto insurance and a large percentage (51%) also expressed an interest in using an app or device to check for a telematics discount before buying a policy, according to a 2015 survey from Towers Watson.
Agents, too, are embracing the trend. According to the 2015 Vertafore Agency Sentiment Survey, independent insurance agents reported a 56% increase in inquiries for usage-based policies and 62% say they anticipate an even greater rise in interest in the next 12 months.
While UBI or telematics programs caused concern when they were first introduced – and still continue to be viewed as a disruptor to the agency model – the number of agents that feel this will be a helpful development has increased.
Roughly 50% of respondents told Vertafore they expect UBI policies to have a positive impact on the way property/casualty agents conduct their business and another 35% anticipate no change.
Not everyone is on board, however. As major auto insurance carriers ask consumers to sign off on sensors in their cars that track more and more personal data, a number of people are viewing these programs with greater skepticism.
Progressive reports that while 80% of its customers could benefit from its telematics device, Snapshot, only about 25% participate. Similarly, the rate of adoption of
Allstate’s new, smartphone-based tracker is just 30%.
“I know some people say, ‘What do you have to hide,’ but I don’t want big business or Big Brother involved in my personal life,” San Diego driver Shauna Aiken told the
Wall Street Journal. “It just creeps me out.”
Another concern is the potential to be penalized with higher insurance rates if driver behavior indicates higher risk. Progressive, for example, charges as much as 10% more in some states for customers who demonstrate risky behavior.
Altogether, the insurance industry has a way to go if it wants to convince its customers that telematics programs will be worth the sacrifice.
“Insurance is not something where people say, ‘I trust you,’” Progressive Chief Executive Glenn Renwick admitted to the
Journal.
