With auto insurers such as Progressive and Allstate increasingly using telematics as an underwriting tool, the question remains as to whether the technology will truly influences drivers to be safer on the road. A new report suggests that the technology helps change behavior of many customers – particularly younger ones – though it lacks definitive safety data.
The main finding: 54 percent of drivers responding to a new Insurance Research Council public opinion survey said they’ve made changes in their driving habits since installing a telematics devices supplied by their insurance company into their main vehicle. Broken down, 36 percent said they made small driving changes and 18 percent replied they’ve significantly changed how they drive as a result of telematics.
At the same time, 38 percent said a telematics device hasn’t influenced their driving habits at all.
Also worth noting: younger drivers were far more likely to make driving changes with telematics than older ones, according to survey results. The survey results support a Towers Watson survey released earlier this fall that found more drivers aged 18 to 34 are interested in usage-based auto insurance policies (telematics) than all other age groups.
The IRC-commissioned survey solicited responses from 1,135 people, by way of GfK Public Affairs and Corporate Communications in June 2015. Telematics monitors driver behavior, often in exchange for discounts.
IRC Senior Vice President Elizabeth Sprinkel said the results imply telematics can encourage safe driver behavior, though whether or not users become safer drivers remains an open question.
“These findings suggest that having telematics devices installed in vehicles can play a beneficial role in promoting safe driving and reducing the frequency of auto accidents and their associated costs,” Sprinkel said in prepared remarks. “While we can’t say with certainty that the changes drivers make are always for the better, or whether beneficial changes that are made become permanent, we can confidently say that the introduction and use of telematics technology is a move in the right direction.”
Progressive has been an early adopter of telematics technology in auto insurance underwriting. Its Snapshot device plugs into a vehicle and by monitoring driver habits, helps calculate customer discounts. Execs there have said that the technology’s use will grow over time into a widely used tool for auto insurance underwriting. Earlier this fall, Allstate’s Esurance rolled out an auto insurance product for which consumers pay by the mile, managed by a small telematics device.
Insurers such as Liberty Mutual and American Family Insurance Co. are also looking into the use of telematics for homes, with a promise of discounts for customers who use high-tech smoke/carbon monoxide alarms and agree to share the data they produce.
Source: Insurance Research Council