One in every three consumers is aware of usage-based insurance (UBI), tripling its awareness in the last three years, according to a new research from LexisNexis Risk Solutions, although only three percent of respondents to the LexisNexis study are "aware and use" telematics.
The number of consumers who are aware of what UBI is has steadily increased over the last three years. LexisNexis reports only 10 percent of consumers were aware of it in 2010 with that number at 36 percent this year.
The study found discounts are the number one driver for UBI enrollment with 50 percent of consumers likely to sign up for telematics in exchange for a 10 percent premium discount while 36 percent of consumers would change carriers to receive a 10 percent discount.
A telematics program shares information about when, how much, and how your car is driven. This information is automatically collected and stored and is available for an insurance company to review in order to determine if a driver is eligible for discounts on premiums.
The study also found that:
- 61 percent are more likely to accept telematics if insurers offer a trial period for three months, while 72 percent of drivers are more likely to accept if an insurer offers an automatic discount of 10 percent for the first six months.
- One in every three consumers finds the idea appealing and is likely to use a personal smartphone to collect and transmit telematics data.
"While UBI continues to become more mainstream, many consumers also find the use of their smartphone in UBI appealing," says Ash Hassib, senior vice president and general manager, auto insurance, LexisNexis. "For insurers, this creates an opportunity to offer programs that fit consumers' lifestyles such as smartphone use, value-added services based on their interests, and capture important information to gauge future driver risk."
The report listed several factors that would increase interest for UBI with the largest being the ability to opt out without penalty (80 percent); receive discount (79 percent); choose the information provided to the insurer (77 percent); control over what you pay (75 percent); and information is saved for a short time (69 percent).
LexisNexis also learned from the survey that consumer behavior supports the success of a telematics mobile app. Sixty-three percent of respondents to the survey have smartphones and estimates are that 81 percent of households will have smartphones in 2014.
The survey also showed that one insurance carrier has a clear lead in awareness of UBI among consumers. Progressive dominated that aspect of the study with 78 percent while Allstate was at eight percent and State Farm at six percent.
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