But a new Towers Watson survey revealed that U.S. automobile drivers are becoming increasingly comfortable with the concept, which is formally known as usage-based auto insurance programs (UBI). In fact, their privacy concerns regarding the technology have also substantially declined as UBI programs have become more common.
Consider: In February 2013, just 4.5 percent of consumers either had a UBI policy in force or did at some point in the previous 17 months. That doubled to 8.5 percent as of July 2014, the survey revealed.
What’s more, nearly 80 percent of the 1,000 respondents who participated in the survey said they’d buy a UBI policy or would at least consider one. Interestingly, that number rises to 88 percent if insurers can ensure that drivers who do this won’t face higher premiums. Towers Watson said the percentages are unchanged from the company’s previous survey.
Still, 35 percent of respondents said they were uneasy about a UBI policy because of consumer privacy concerns. Even so, that’s down from 42 percent in last year’s survey, Towers Watson noted.
Robin Harbage, Global lead for Towers Watson’s UBI practice and the company’s DriveAbility service offering, said in a statement that the survey shows UBI interest continues to gain steam in the marketplace.
“Today, all 50 states have four or more personal auto UBI programs implemented,” Harbage said, noting its increasing availability appears to be helping consumers to grow more accustomed to the idea of UBI technology and its everyday use.
Nearly half of consumers who responded to the survey, said, however, that they’d be uneasy about facing higher premiums due to UBI programs. Harbage said that the results support the continued practice among most insurers of offering discounts, rather than surcharges, based on what UBI data tells them.
Most U.S. UBI programs use a small device (OBD II) that plugs into a port under the dash of a car. Once installed, it collects driving data. That technology could change over time, however, based upon consumer interest. Towers Watson said that 80 percent of smartphone owners said they’d be O.K. with the idea of downloading UBI apps on their devices in order to monitor their driving.
“Smartphone implementations of UBI are very appealing to many insurance companies because they don’t require as much up-front cost as purchasing OBD II devices,” Towers Watson senior consultant Len Llaguno said in a statement. “There is tremendous opportunity for insurers that can figure this out.”
Source: Towers Watson