Consumers interest in telematics reaches new heights
Now is a good time to talk to consumers about telematics programs. Findings from Nationwide’s latest Agent Authority research[i] show that more auto insurance customers are ready to give telematics a try than agents might realize. This presents an opportunity for agents to start selling, because only 10% of consumers reported currently using a telematics device, but 65% are open to it if provided a discount.
The survey identified other key areas that shed light into consumer views of telematics and how a personal lines agent can be a source of knowledge to counsel their client on telematics—or usage-based insurance—and drive agency sales.
Consumers need to be educated on telematics but are receptive
Only a quarter of consumer respondents (27%) say they know what telematics is, leaving a large group of consumers that need educated on what telematics is. This is where an insurance agent can be proactive in starting the conversation, because 67% of consumers said they’ve never discussed telematics with their agent.
Part of the reason behind this might be that 40% of independent agents don’t feel knowledgeable enough to speak on telematics to help counsel a client. The findings show that agency owners might feel well versed in telematics, but their staff is less confident and many feel they need more resources to learn.
Advice for agents—offer telematics: Talk to your clients about telematics and how it could help reduce their auto premiums. Use these resources to help them learn more about how telematics can lead to potential cost savings. Learn about the different types of telematics options each carrier offers, including pay-per-mile and safe driving programs. Nationwide is expecting telematics interest to only increase and projects 70% (or more) of new business will come from usage-based insurance programs by 2025.
Potential privacy concerns dissipate when you start talking about a discount
It’s probably no surprise that 6 in 10 (62%) consumers have privacy concerns about the information a car telematics device is capturing and how insurers use the data. 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. Or a pay-per-mile auto insurance program that allows you to pay based on miles driven. However, the survey shows that this barrier can be overcome as 65% of respondents said they would allow a car telematics device to capture their driving behaviors if it provides them a discount.
Advice for agents—address privacy concerns: Assure your clients that the driving data collected by Nationwide is used for insurance purposes related to the SmartRide or SmartMiles programs and never sold to any third parties. Additionally, drivers can easily see their driving data that is gathered through the app or online web portal. Agents should confirm this is true with your other insurer partners. It’s also important to bring up the cost savings potential—drivers that enroll in Nationwide’s usage-based insurance programs are seeing an average savings of more than 20% compared to a traditional policy. Know the different telematics options and how to talk about them. SmartRide® is an insurance program that rewards safe driving with a discount of up to 40%. SmartMiles® is pay-per-mile auto insurance for low-mileage drivers that offers the same great coverage as a traditional Nationwide auto policy based on miles driven.
There are misconceptions about the cost and savings associated with participating in telematics
A quarter (24%) of consumers believe there is an added cost to participate in a telematics program, and more than half (57%) think using a telematics product could make their rates go up. This emphasizes an opportunity for an agent to inform their client on how usage-based programs work, including sharing that there is no cost for a consumer to enroll in many usage-based insurance programs.
The findings also found that the rising cost of insurance is a concern for more than half (58%) of consumers, with agents seeing it even more, responding that 76% say the rising cost of insurance is a top concern among customers. Explaining to clients that telematics helps personalize their auto insurance premium is a vital step.
Advice for agents—explain pricing benefits: Reassure your clients that Nationwide’s usage-based insurance programs are free for a customer to enroll and with the SmartRide® program, consumers can only earn added discounts to their policy. Help clients understand their options and that programs offer a discount based on safe driving or based on the number of miles they drive.
These and other important insights came out of the 2020 summer survey of the Agent Authority research series conducted by Nationwide, which includes samples of independent insurance agents, small business and mid-market business owners, and consumers.