Usage-based insurance is gaining popularity as more drivers use smartphones, according to reports.
Further, the past year and a half saw increased interest among insurers in the technology, especially as drivers are becoming more comfortable with sharing their data to get discounted rates, observed Gwenn Bezard, co-founder and research director at financial research firm Aite Group.
Quoting industry figures, Bezard said that more than 30% of new clients are now choosing usage-based insurance at
Nationwide and Progressive.
Usage-based insurance bases rates more on the policy holder’s driving record than the conventional credit score. Such records are derived from devices that track driver behaviour, known as telematics.
The service is becoming more popular, as smart phones have grown by leaps and bounds in their capability to monitor driver behaviour, Bezard added.
Among others, Fair Isaac Corp (FICO) could be offering its Safe Driving Score service to get its foot in the telematics door, the research executive further said.
Strategy Meets Action, a Boston based research outfit, projects that by 2020, 70% of all auto insurance policies in the US will use telematics.
Industry observers say that as more drivers patronize usage based auto insurance because more of them are using smartphones, policy holders could possibly realize increased savings on their coverage.
"The average discount [for usage-based insurance] has gone up from the mid-teens to the mid-twenties," explained Alex Hageli, director of personal lines policy at the Property Casualty Insurers Association of America.
"Each insurer has its own special sauce," Hageli added. "So it's good to get in the habit of shopping around for the best rate at least once a year."
