The advantages of using telematics with personal lines clients

Telematics is a form of technology that can offer various benefits to drivers, such as greater awareness of safe driving practices and control over auto insurance premium. This technology—which can be leveraged through plugged-in vehicle devices, mobile applications or connected cars—is able to deliver these advantages by collecting a range of vehicle data (e.g., location and mileage) and information on driving behavior (e.g., speed, acceleration, idle time and hard braking).

Despite these benefits, an Agency Forward survey revealed that insurance agents’ lack of knowledge and communication regarding telematics have possibly held their personal lines clients back from utilizing this technology. Specifically, only 6 in 10 agents and just 3 in 10 consumers feel well informed about telematics programs, with 58% of consumers reporting that they have never even discussed these offerings with their agent.

Considering these numbers, it’s clear there’s an opportunity for carriers and agents to increase their overall value, boost retention and help clients save money on auto insurance by offering telematics programs. This is especially true when considering that only 28% of consumers shopping for auto insurance are presented with a telematics-based policy option. Of those presented with a telematics-based option, 61% opted for that form of coverage.¹ As such, it’s important for agents and carriers to shed common misconceptions about these programs and gain a better understanding of their numerous advantages.

Common misconceptions regarding telematics

Telematics data exposure

First, some agents might be concerned about the potential data exposures associated with telematics programs, thus assuming their clients would be skeptical of or altogether unwilling to share vehicle and driving data with auto insurers. While data security is certainly a top priority among consumers, these individuals may be more accepting of sharing their information via telematics offerings than agents realize.

In a recent interview with Carrier Management, Nationwide’s President of Personal Lines, Casey Kempton, shared some insights around the misconceptions with data:

“What is happening to my data? That all exists and it is real. But when you give drivers real-time information about how distracted they were on a trip, or what are some of their [driving] behaviors that merit improvement—if you take that model and you put it against young drivers who are just learning—then not only are we now addressing insurance premiums and potential loss and credit for good driving, we’re also making better drivers. [That’s] a major concern of a lot of parents of youthful drivers. And that’s where the opportunity is.”

According to an Agency Forward survey, consumers are actually more comfortable with having a connected device or mobile application that collects information on their vehicle performance and driving practices than they are with a number of other data collection methods—including those used by social media companies, streaming platforms and personal devices (e.g., fitness tracking watches or smart home entertainment centers). Kempton also shared, “Where there’s an openness to that already, then reaching those customers and making sure they know that Nationwide has these benefits available, and that control, is part of just the first challenge. There are people who are already oriented and wired and are seeking that control.”

Telematics programs increase insurance premiums

Additionally, agents may fear that their clients could end up with higher insurance premiums after enrolling in telematics programs due to poor vehicle performance or risky driving behaviors. While this may be a possibility within programs offered by other auto insurers, Nationwide does not penalize drivers due to their use of telematics programs.²

The goal of Nationwide’s telematics offerings is to empower customers to influence their auto insurance premiums through safer driving habits.

In some instances, a driver will receive an initial auto policy discount just for enrolling in their telematics program, becoming eligible for deeper discounts if they display safe driving behaviors.  Nationwide’s telematics programs are intended to help drivers save money—not pay extra—for their auto insurance and to make roadways safer.

Telematics are complicated and time-consuming

Agents may feel that the process of selling telematics (which may include overcoming any objections to the programs), enrolling and activating or installing this technology is too complicated and time-consuming. Yet, taking the time to offer telematics programs is well worth it, as these programs can help clients drive safer, reduce auto insurance costs, and, Nationwide found, SmartRide® participants tend to have higher retention rates.³ Further, enrolling clients within telematics programs is relatively easy, and many associated policy discounts are applied automatically as vehicle and driving data are collected. Lastly, setting up this technology usually only requires drivers to download a mobile application or install a device in their vehicle—the latter of which can often be done in a matter of minutes without any special equipment.

Key advantages of telematics for insurance agents and personal lines clients

Apart from overcoming misconceptions about telematics, telematics offers benefits for both agents and their clients. Here are some of the key advantages of providing telematics offerings:

• Fostering safer driving habits — Telematics can empower drivers to monitor their habits behind the wheel more closely and motivate them to uphold smarter practices. Through telematics, drivers may be able to better analyze their behaviors on the road, allowing them to correct potential safety issues and identify hazards they may not have noticed otherwise. By promoting driver accountability and encouraging responsible behaviors, telematics can even help reduce the likelihood of drivers being involved in accidents. In particular, telematics may help discourage distracted driving behaviors, such as texting, fiddling with the radio or adjusting the navigation system behind the wheel. According to the previously mentioned Agency Forward survey, 83% of consumers consider distracted drivers (namely, those using their mobile phones while driving) a major concern on the road.

• Providing cost-saving opportunities — In addition to fostering smart habits behind the wheel and curbing possible claims, telematics programs can also allow drivers to reduce their auto insurance premiums. Some programs provide safe driving discounts, other programs leverage a pay-per-mile system, which determines drivers’ monthly premium costs based on how many miles they drive. These programs are particularly cost-effective for low-mileage drivers, such as those who work remotely or have an extra vehicle that they rarely drive. In any instance, telematics programs can give drivers greater control over their auto insurance expenses.

• Increasing agency value and client retention — Offering telematics programs can help insurance agents expand their services, boosting their overall value to clients. What’s more, agents who offer telematics programs demonstrate to their clients and prospects that they are forward-thinking, thus separating themselves from competitors and appearing more attractive than agents who don’t offer such programs. Finally, providing telematics programs can help agents drive profitable growth and bolster retention rates. After all, clients will be more likely to remain with their respective agents if they receive innovative insurance solutions that offer them a personalized premium and a reliable experience.

Utilizing Nationwide’s telematics offerings

As a whole, telematics programs provide major benefits for both insurance agents and their clients.  By offering telematics programs, agents enable clients to use real-time data to improve their driving behaviors while also elevating agency success.

Given that the Agency Forward survey found that over two-thirds of consumers trust their insurance agent to advise them on telematics programs, it is vital that agents take the time to familiarize themselves with the programs and effectively communicate its benefits to their clients.

Looking at Nationwide’s telematics programs, there are two main offerings available. SmartRide® is a program that rewards safe driving behaviors by offering up to 40% policy discounts.⁴ SmartMiles® is a pay-per-mile program for low-mileage drivers that offers a flexible rate based on miles driven each month.⁵ Agents can discuss clients’ driving routines to decide which offering is most suitable for their specific circumstances.