ATLANTA – Consumers are beginning to see the safety benefits associated with telematics as a major proof point when deciding whether or not to adopt a usage-based insurance (UBI) program, while commercial fleet managers are interested primarily in price cuts. According to the 2014 LexisNexis Insurance Telematics Study released today, the data also found that commercial fleet managers are nearly as aware of UBI as consumers, at 25 percent and 38 percent awareness, respectively.
While insurance rate discounts continue to be the number one driver in usage-based insurance adoption, more consumers are now viewing telematics as a legitimate resource for ensuring car safety for themselves and their families.
Specific findings showing the increasing importance of safety services among today’s consumers include:
Another overall insight gleaned is that consumers comfort levels with sharing personal UBI driving data are increasing. In fact, the consumer comfort levels with sharing individual UBI driving data (35 percent) are comparable to their level of comfort for sharing online banking data (36 percent), search data (29 percent) and social media personal information (27 percent).
“Smart devices, smartphones and smart cars are converging to create what should be a smart insurance choice for safe drivers and their insurers,” said Ellen Carney, Principal Analyst, Forrester. “The policy option is a win-win for the insured and the insurer: Customers pay lower premiums and improve their driving, while insurers attract safer and lower-risk drivers. What is surprising is how few US consumers have actually bought it,” added Carney.
“Our study has found, some of the traditional barriers are beginning to subside, such as the difficulty to use and the fear that insurance companies will have too much personal information,” said Ash Hassib, Senior Vice President and General Manager, Auto and Home Insurance, LexisNexis. “This shift shows us that consumers are becoming more trusting of telematics, and therefore more likely to adopt.”
Similar to basic UBI, interest in Mobile UBI is also growing with an increase from 29 percent in 2013 to 34 percent in 2014. Additionally, smartphone penetration among enrolled drivers is expected to be high.
Fleet Manager Findings
Price and savings are the number one factor in fleet managers’ decision to incorporate UBI into their small commercial fleet. Despite significantly less insurer marketing for UBI in this space, small business awareness of UBI is relatively strong at 25 percent.
The study also explored the effect of value-added services, mainly fleet management capabilities, on a UBI program offering. Contrary to common beliefs, results show that small fleets want UBI, with or without fleet management services. They find the discount and simplicity of UBI appealing.
“Two-thirds of small fleet managers shop for insurance every two years or more,” said Ernie Feirer, Vice President and General Manager, Commercial Insurance, LexisNexis. “These fleet managers are looking for ways to save money and our study shows 27 percent of them would sign up for a UBI program. This leaves a lot of room for growth and a huge opportunity for carriers offering UBI.”
Specific findings showcasing how commercial fleet managers are adopting UBI to save money include:
Small fleet managers also value services such as stolen vehicle tracking, fuel consumption/efficiency updates and automatic emergency crash response according to additional findings from the survey. Commercial fleet managers are also receptive to mobile UBI technology and 73 percent of small fleet drivers have smartphones.
“With the uptick in consumer awareness shown in the study findings, we are more dedicated than ever to bringing insight-driven, end-to-end UBI solutions to our customers,” Hassib said. “With our recent acquisition of the UK-based industry-leading telematics data services company, Wunelli, we now possess one of the largest provider-held insurance telematics databases in the world. This allows us to best support insurers as they assess risk, discount safer drivers and serve their customers more effectively.”
About LexisNexis Risk Solutions
LexisNexis Risk Solutions harnesses the power of data and advanced analytics to provide insights that help businesses and governmental entities reduce risk and improve decisions to benefit people around the globe. We provide data and technology solutions for a wide range of industries including insurance, financial services, healthcare and government. Headquartered in metro Atlanta, Georgia, we have offices throughout the world and are part of RELX (LSE: REL/NYSE: RELX), a global provider of information and analytics for professional and business customers. For more information, please visit www.risk.lexisnexis.com and www.relx.com.