The advantages of using telematics with personal lines clients
Telematics is a useful form of vehicle technology that can offer various benefits to drivers, such as greater awareness of safe driving practices and reduced auto insurance expenses. This technology—which can be leveraged through plugged-in vehicle devices, mobile applications or internet-connected cars—is able to deliver these advantages by collecting a range of valuable vehicle data (e.g., location and mileage) and information on driving behavior (e.g., speed, acceleration, idle time and hard braking).
Despite these benefits, a recent 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.
“Although nearly half of consumers have shown interest in learning more about telematics offerings, less than one-third of insurance agents provide such programs to the majority of their client base.”
Considering these numbers, it’s clear that agents have an opportunity to increase their overall value, boost retention and help clients save money on auto insurance by offering telematics programs. As such, it’s important for agents to shed common misconceptions about these programs and gain a better understanding of their numerous advantages.
Common misconceptions regarding telematics
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. According to the 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).
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.1
“The main goal of Nationwide’s telematics offerings is to help provide reduced auto insurance premiums to drivers who prioritize safety behind the wheel or use their vehicles less frequently.”
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 behaviors behind the wheel. If a driver’s habits don’t qualify them for safe-driving premium deductions, their policy simply won’t reflect any extra discounts at renewal. In other instances, a driver will pay less for their policy upfront, eventually getting charged based on their low annual mileage. Regardless, Nationwide’s telematics programs are intended to help drivers save money—not pay extra—for their auto insurance.
Also, agents might assume that the process of selling telematics programs to clients (which may include overcoming any objections to the programs), enrolling them in such programs, 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 make all the difference in helping clients drive smarter on the road and minimize their auto insurance costs. 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
Apart from overcoming their misconceptions about telematics, agents also need to understand the main ways this technology can benefit both them 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 (and subsequent auto insurance claims) by as much as 30%.2 Considering that the vast majority (94%) of all collisions on the road are caused by driver error, this benefit is significant.3 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. Preventing these dangerous behaviors has become increasingly important, as accidents caused by distracted driving claim over 3,000 lives each year.4
- 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 expenses. Some programs provide safe driving discounts, which are applied as drivers display a continued commitment to proper practices on the road (e.g., obeying the speed limit, refraining from sudden braking or acceleration, and avoiding congested traffic routes). 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 and provide further avenues for minimizing premium pricing. In fact, drivers can earn between 10% and 50% savings on their auto insurance by participating in these programs.5
- 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 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 significant cost savings.
Utilizing Nationwide’s telematics offerings
As a whole, telematics is a valuable type of vehicle technology that can provide major benefits for both insurance agents and their client base. By offering telematics programs, agents can help their clients stay safe behind the wheel and cut auto insurance costs while also elevating agency success.
Especially considering that the Agency Forward survey found over two-thirds of consumers trust their insurance agent to counsel them on telematics programs, agents should be sure to take the time to educate themselves and communicate with their clients about this technology.
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. SmartMiles® is a pay-per-mile program for low-mileage drivers that offers a flexible rate based on miles driven each month. Agents should discuss clients’ driving routines to decide which offering is most suitable for their specific circumstances.