Americans Are Gaining Interest in Usage Based Auto Insurance
Researchers say that American drivers are becoming more comfortable with auto coverage that is based on usage. These usage-based insurance programs let insurers keep track of their policyholders' driving activities and responsibility via a telematics device. In exchange for driving responsibly, policyholders may qualify for lower premiums. Researchers said the amount of people who had UBI policies during the past 17 months doubled. In February of 2013, the number of people with these policies was less than five percent, but the number increased to nearly nine percent by July of 2014.
UBI keeps gaining popularity in the marketplace, and experts say that their survey shows positive possibilities of even more growth in the future. They say that every state has at least four auto insurance companies using UBI programs. Nearly 80 percent of the people who were surveyed said they would be buying one of these policies or they were seriously considering the possibility. When presented with the possibility that insurers would tell survey respondents they would receive a discount if they used UBI programs, nearly 90 percent said they definitely would use this type of coverage.
During the past year or two, the amount of interest people have shown in this type of coverage remains strong, but privacy concerns have decreased. About 35 percent of survey participants said they felt uneasy about their insurers monitoring every move they make on the road, and this number was down from more than 40 percent the prior year. These statistics show that the idea of a better value in exchange for better driving is resonating with consumers, and they also think privacy concerns will be overshadowed by the possibility of significant premium discounts.
About 50 percent of consumers do not feel comfortable about the possibility of higher premiums because of UBI. This finding has encouraged insurers to focus only on discounts and not penalties. To settle consumers' fears on the matter, many American insurers have promised not to implement surcharges but only to offer discounts for responsible driving. Most programs use OBD II devices, which connect to a port in a vehicle for data collection. Many consumers said they were willing to use apps on their smartphones instead of using the data collection devices, and about 80 percent said they thought it would be acceptable to download an app for that purpose. However, about 30 percent of respondents said they did not own smartphones.
While consumers seem enthusiastic about the possibility of smartphone apps for tracking driving habits, insurance companies say there are no options they find appealing enough to adopt on a widespread basis. This means the market for app development in this area is still open, so insurance companies and app developers have plenty of work to do. Consumers said they would like apps that recorded their overall driving experiences, which would be logged when the trip ended.
Insurance experts say that making sure all experiences are collected is the main challenge with using smartphone apps. They are still waiting to see what will develop and if drivers will remain consistent with the use of apps. One main concern consumers had with using an app was how much power it would drain from the phone battery during the day.
Please call us to learn your options regarding Usage Based Auto Insurance.
Karli Zeiler
708.597.5900 x130
karli@zeiler.com