More US drivers are open to opting into usage-based insurance (UBI) programmes to save on their insurance premiums, according to a new study from the Insurance Research Council (IRC). However, more widespread acceptance of telematics programmes and UBI remains elusive due to privacy concerns.
UBI programmes track driving behaviours such as distance driven and braking habits, using either a plug-in device in a vehicle or, increasingly, a smartphone app. Car insurance companies use this information to reward participating consumers who practice safe driving habits with insurance cost savings. The programmes also commonly provide participants with feedback about their driving behaviour.
The online survey of more than 2000 US drivers found that most consumers participating in telematics programmes report a decrease in insurance costs, and eight out of 10 said the programme helped change the way they drive. However, many drivers choose not to participate in telematics programmes for a variety of reasons.
“While we are seeing more drivers participating in telematics programmes than ever before, some consumers we surveyed indicated hesitancy in signing up due to privacy concerns,” said Dale Porfilio, President of the IRC and Chief Insurance Officer of the Insurance Information Institute.
According to the study, barriers to participation in such programmes include driver disinterest, difficulty understanding them, and apprehension about increased insurance costs.
“Younger drivers were less likely to express concerns about privacy. This same group also indicated the highest interest in finding ways to reduce their premium,” added Porfilio. “Telematics programmes provide the opportunity for safe drivers to lower their insurance costs and can improve overall road safety. Most users say they have made positive changes in the way they drive as a result of telematics data provided to them by their insurer. Safer driving reduces the frequency and severity of auto accidents, saving lives and allowing for more affordable vehicle insurance for all consumers.”