Usage-based personal auto insurance may be drawing ever-increasing attention. Its wider adoption is stymied, however, by customer age and demographics, privacy concerns, misunderstanding about the technology, and even contentment with existing coverage, according to a new analysis from Standard & Poor’s Global Market Intelligence.

Just over 11 percent of respondents who owned a smartphone and had a drivers license said they installed their insurance company’s usage-based insurance mobile app, according S&P-owned 451 Research’s Voice of the Connected User Landscape. Out of that number, just 9 percent actively use it.

Age is also a factor, though adoption rates were low across the board. Usage-based driving apps had adoption rates of 17.1 percent and 15.5 percent among Generation Z and millennials, respectively. But less than 8 percent of Generation X, baby boomer and senior respondents said they had a UBI mobile app installed, according to the cited statistics.

Still, usage-based insurance continues to have potential. Approximately 35 percent of respondents said they would either be somewhat or very interested in using a UBI mobile app.

“The survey results show that auto insurers have the opportunity to win converts to UBI coverage, particularly among many younger adults who have not become early adopters,” S&P’s Tim Zawacki wrote in the analysis. “But the process of convincing some customers to change the nature of their auto insurance coverage may be more akin to winning new business than cross-selling ancillary products.”

The survey was conducted online in July 2021 among 1,121 licensed drivers.

Among additional highlights from the analysis:

  • More than 21 percent of respondents with household incomes between $125,000 and $249,000 said they would be very interested in installing a UBI mobile app. Just 11.2 percent of respondents with incomes between $25,000 and just under $50,000 said they’d want to install the app. That number drops to 9.1 percent for those with household incomes below $25,000.
  • Close to 23 percent of respondents said that they don’t have a UBI app installed because of privacy concerns.
  • More than 28 percent of respondents said they don’t have a UBI app because they’re content with their existing coverage. That contentment number hits 40 percent for seniors but drops to just under 20 percent of Generation Z respondents.
  • A bit more than 15 percent of respondents said UBI apps were too complicated. That drops to 7.2 percent for baby boomers but was a top concern for Generation Z.

S&P’s analysis notes that digital insurance startup Root is betting its business model on UBI, competing with UBI pioneers and older carriers such as Progressive and Allstate. But others, such as GEICO and USAA, are steadily rolling out their own efforts.

The full S&P article is “Survey finds customer inertia stymies private auto UBI adoption.”

Source: Standard & Poor’s