Approximately 78 percent of commercial auto insurers are in the research phase of preparing for usage-based insurance (UBI) products, according to a new report from The National Alliance for Insurance Education and Research and SambaSafety.
This signals interest in UBI, “but not much comfort or readiness to implement,” said the report.
“The survey results show that telematics technology has outpaced consumption, and usage falls short of full potential,” said Matt Scheuing, CEO of SambaSafety, a provider of driver risk management software, including telematics. “But telematics offers the opportunity for the insurance industry to break out of the cycle of reacting to the rising cost of claims by raising premiums.”
According to a media statement, 335 insurance professionals were polled to uncover the obstacles to telematics adoption. Commercial line respondents cited variances in data formats among telematics service providers, differing terminology and event tracking among systems as challenges.
Overall, 65 percent of commercial carrier respondents to the survey indicated their companies have some level of telematics adoption, with the largest share (38 percent) reporting they are still in the early stages. One-third of commercial auto respondents anticipate launching a usage-based insurance (UBI) product within one or two years.
Other key findings of “From Perception to Practice: An Insight into Insurer Data Strategies and Sentiments” include:
- 72 percent of commercial insurance companies offer or plan to offer a telematics-based product
- More than half of agents report less than 10% adoption of UBI among their personal auto customers
- 15 percent of broker respondents offer telematics value-added services
- Agents and brokers said personal and commercial customers want a higher level of trust to adopt telematics
The survey also explored the benefits of telematics. Responses showed that 63% of commercial line carriers share insights on risk to help clients, brokers and agents mitigate risk and improve premiums. Roughly 55 percent of commercial carriers also offer on-demand training to help improve performance, while 50 perecent of commercial insurers plan to increase the risk control resources offered to clients.
“In this dynamic era, where data steers our choices, it’s crucial for the insurance industry to remain informed, proactive and tactical,” said Paul Martin, CPCU, director of academic content for The National Alliance. “The report not only captures current industry sentiments but also provides a roadmap for the future; it encapsulates the evolving storyline of insurance, fueled by data, insights and modern technology.”
Just 27 percent of commercial auto respondents have internal, dedicated telematics or connected car teams at their organizations, and only 6.25 percent have robust infrastructures to handle large volumes of telematics data, according to the report.
“Telematics enables an alternative approach,” Scheuing said. “It provides a way to focus on granular risk by offering unparalleled visibility and objectivity, leading to fair and precise assessment of mobility risk — and to profitability.”