COLUMBUS, Ohio, Dec. 9, 2020 /PRNewswire/ -- More auto insurance customers are ready to give telematics (usage-based insurance) a try, presenting insurance agents an opportunity to grow their business and enhance relationships, according to a new Agent Authority survey* from Nationwide.
The survey finds that while two-thirds of consumers (65%) said they would allow a telematics device to capture their driving behavior if it provided a discount, only 10% of consumers report actually using one.
Nationwide's survey identified three key themes that shed light on consumer viewpoints regarding telematics and how personal lines agents can provide trusted counsel to their clients about the subject:
- Consumers need to be educated on telematics; many do not know what it is or why they should consider using it.
- Many consumers' privacy concerns dissipate after learning they get a discount.
- There are misconceptions about the cost and savings associated with participating in telematics.
"Usage-based insurance programs and the personalize rates they can provide are becoming the insurance choice for American drivers," said Teresa Scharn, vice president of Personal Lines Product Development at Nationwide. "Insurance agents are the best resource to help consumers understand usage-based insurance options, design solutions to fit their needs, and potentially save them money."
A knowledge gap
Only about a quarter of consumers (27%) say they know what telematics is, and half of those surveyed (51%) saying a lack of knowledge is the key barrier to using telematics.
Nationwide's survey also revealed:
- 67% of consumers have not discussed telematics with an insurance agent.
- 40% of insurance agents don't feel knowledgeable enough to speak on telematics to counsel clients.
- Agency owners might feel well versed in telematics, but their staff is less confident:
- 79% of principals feel they provide employees enough resources
- 63% of producers say they are provided some or plenty of resources
- 32% of customer service reps say they are provided some or plenty of resources
"Telematics usage is increasing, and Nationwide expects the usage-based insurance trend to continue," explains Scharn. "In 2020, customer interest in telematics increased by 30%1, and Nationwide is projecting 70% (or more) of new business will come from usage-based insurance programs by 2025. Carriers need to provide agents with up-to-date information on the different types of telematics options, including pay-per-mile or safe driving programs, so they can confidently counsel their clients."
Reminders for agents:
- Clients may not know what telematics or usage-based insurance is. Consider starting your next conversation by gauging their telematics knowledge and asking if they would like to learn more about how telematics can lead to potential cost savings.
- Carriers can provide agency owners and their staff with information and resources to help educate clients about telematics including how to address common objections and misperceptions.
Privacy concerns dissipate when you start talking about a discount
Usage-based insurance programs use driving data to determine whether drivers qualify for a safe driving discount on auto insurance and can provide feedback to help drivers make even safer driving decisions. However, 6 in 10 (62%) consumers have privacy concerns about the information telematics is capturing.
However, the survey also showed that this barrier may be easy to overcome and lead to a conversation about telematics discounts as 65% of respondents say they would allow a telematics device to capture their driving behaviors if it provided them a discount.
How agents can address a consumer's privacy concerns:
- Driving data collected by Nationwide is used for insurance purposes and never sold to any third-party entities. Confirm this is true with your other insurer partners.
- Remind consumers about the cost savings telematics may be able to provide. For instance, drivers that enroll in Nationwide's usage-based insurance programs are seeing an average savings of more than 20% compared to a traditional policy. SmartRide® is an insurance program that rewards safe driving with a discount up to 40% off. SmartMiles® is pay-per-mile insurance for low-mileage drivers that offers a flexible rate based on miles driven.
The Agent Authority survey highlights misconceptions consumers and agents hold about the cost associated with telematics. A quarter (24%) of consumers who don't currently use a telematics device believe there is an added cost to using one, and more than half (57%) believe using a telematics product could make their rates go up.
"This emphasizes opportunities for carriers to inform agents and their clients on how usage-based insurance works, and how consumers should be paying for the auto insurance coverage that meets their unique needs," advises Scharn.
Nationwide's survey also revealed:
- The rising cost of insurance is a concern for more than half (58%) of consumers. 76% of agents surveyed said the rising cost of vehicle insurance is the top concern among their customers.
- Almost half (49%) of consumers believe telematics can help them save money and are fairly split on how much they think they can save a month with telematics:
- 32% think less than $10
- 31% think they can save $10-19.99
- 15% think they can save $20-$29.99
- 22% think they can save $30 or more
Reminders for agents:
- There is no cost for a customer to enroll in many usage-based insurance programs—and at Nationwide, SmartRide consumers can only earn added discounts on their policy.
- Help clients understand their options. There are telematics programs that offer a discount based on safe driving or based on the miles they drive.
Customers can count on their agents to help them become more comfortable with telematics because an agent can:
- Provide information on what telematics is and how it may fit their driving habits.
- Address privacy concerns and help them potentially save money.
- Debunk misconceptions about increased costs.
*These insights and more were uncovered through Nationwide's ongoing Agent Authority research series, which includes samples of independent insurance agents, various business owners, and consumers. Previous Agent Authority research reports: Agent-customer relationship; Small business owner needs and challenges; Middle market business owner needs and challenges; Agents' top concerns through the pandemic; Consumer and business owner cyber preparedness; Middle market business owners telematics.
Nationwide commissioned Edelman Intelligence to conduct a 20-minute quantitative online survey among a sample of 1,600 U.S. independent insurance agents, mid-market business owners with fleet vehicles, and general consumers between June 9 – June 25 to understand what business owners and consumers value when buying or renewing insurance policies, explore the different challenges each audience faces around insurance, gauge perceptions of the economy and how each audience is managing uncertainty, and find out the actions business owners and consumer have taken as a result of COVID-19 and the conversations they're having with agents. As a member of CASRO in good standing, Edelman Intelligence conducts all research in accordance with Market Research Standards and Guidelines.
Nationwide, a Fortune 100 company based in Columbus, Ohio, is one of the largest and strongest diversified insurance and financial services organizations in the U.S. and is rated A+ by both A.M. Best and Standard & Poor's. The company provides a full range of insurance and financial services, including auto, commercial, homeowners, farm and life insurance; public and private sector retirement plans, annuities and mutual funds; banking and mortgages; excess & surplus, specialty and surety; pet, motorcycle and boat insurance. For more information, visit www.nationwide.com.
1 J.D. Power 2020 PULSE survey