More drivers aged 18 to 34, commonly known as millennials, are interested in usage-based auto insurance policies than are drivers in all other age groups.
Specifically, 88 percent of millennials are interested in taking out a UBI, also known as telematics, policy compared to all other age groups – a number that hit 74 percent – according to a survey by Towers Watson, which consults on and sells UBI services to insurers.
This relatively high interest in usage-based insurance (UBI) among consumers goes up further when they are promised that their premiums will not go up due to poor driving behavior, according to Towers Watson, which consults on and sells UBI services to insurers. With that promise, 93 percent of millennials and 85 percent of all others express interest in a UBI policy.
However, nearly half of all respondents (46 percent) said they would not buy a UBI policy if it could cause their premiums to increase.
About one-quarter of respondents (26 percent) said they are not familiar with UBI policies.
According to the Towers Watson’s UBI (Telematics) Consumer Survey, nearly three-quarters of millennials believe auto insurance policies linking their driving behavior with premium paid is a better way to calculate costs than traditional factors such as age, gender and credit score. Only half (of all other age groups feel the same.
“I think it’s fair to say millennials are not only amenable to UBI but actually prefer it to conventional ways of calculating their auto insurance premium,” said Len Llaguno, senior consultant, Towers Watson.
Its online survey attracted 1,061 respondents, according to the firm.
The survey suggest that millennials, who now outnumber their parents’ generation of baby boomers, appear more willing than others to change their driving behavior in response to UBI information. They cited obeying the speed limit and maintaining a safe following distance as behaviors they would most likely change.
Respondents of all ages said they would be willing to pay more for additional services enabled by UBI technology. Ninety percent of millennials willing to buy a UBI policy said they would pay at least an extra $45 per year for these benefits, compared to 65 percent of all others surveyed. Their preferred services are theft tracking, automated emergency call and breakdown notification service.
“Parents see a real appeal in UBI, citing the ability to be informed about a child’s accident, automatic emergency services dispatch and text prevention as the most beneficial features,” said Llaguno.
Almost two-thirds of participants (62 percent) who have a UBI policy reported a positive experience with it, with 70 percent saying they enjoyed lower insurance premiums as a result.
Source: Towers Watson