At a time when consumers and business owners are focused on cost efficiency more than ever, telematics solutions offered by insurance carriers present a prime opportunity for customers to leverage their driving data’s potential to enable discounts and operational savings.
Nationwide’s latest Agent Authority survey found that 65% of consumers would be willing to allow telematics to capture their data if it provided an insurance premium discount, but an overall lack of knowledge on the solutions and benefits available to them is a major hurdle. On the flip side, middle market business owners demonstrated a high level of awareness of telematics and support for investing in the technology due to its safety and operational impacts but could use more guidance on which solutions fit their needs and how insurance ties in.
The results emphasize the important role carriers play in offering innovative but easy-to-implement solutions, in tandem with robust sales and marketing resources for distribution partners like agents and brokers, to help drive home the benefits and instill confidence in customers in using telematics.
Lack of telematics knowledge a barrier for consumers
Just over a quarter of consumers (27%) surveyed say they know what telematics is and over half agree lack of knowledge is a key barrier to using the devices. They’re also fairly split on how much they think telematics could save them each month.
Notably, while 67% of consumers have not discussed telematics with an insurance agent, it’s clear that they’d greatly benefit from an agent’s counsel. Consumers who say they don’t use telematics were likely to also hold key misconceptions about costs with using the devices. A quarter (24%) said they believe there’s an added cost to using telematics, and more than half (57%) believe using a device could make their rates go up.
In fact, in 2020, drivers enrolled in our usage-based insurance programs are saving an average of more than 20% compared with a traditional policy. By 2025, we project usage-based programs will account for 70% of personal lines new business.
Through innovative partnerships with companies like Cambridge Mobile Telematics, Nationwide is also delivering new features like monitoring and informing drivers of their distracted driving risks – a major concern of 42% of consumers.
Telematics can solve business owner challenges
In addition to managing their business, many middle market business owners face added concerns related to the safety of their drivers and fleet vehicles. They also experience 7.5 accidents per year with their fleets, so it’s not surprising their top concerns include distracted driving among employees (83%), rising cost of insurance for fleet vehicles (82%), safety of drivers and accidents with business vehicles (81%) and knowing the location of their vehicles (76%).
Interestingly, business owners may overestimate difficulties of implementing telematics. Many cited the costs of investing in telematics (35%) and the time it would take to install the devices (21%) as top barriers for using the solutions. The majority of respondents don’t see costs as an issue, however, with 52% of business owners saying they’d pay $30 or more a month per vehicle to ensure safer driving and 87% saying the benefits outweigh the financial costs.
See also: The Evolution of Telematics Programs
Telematics can address many of fleet owners’ concerns, and the opportunity is ripe for carriers and agents to change conversations with customers about telematics from an "add-on" perk to what it really has become – an essential tool for managing a business. With nine-in-10 business owners agreeing telematics improves driver safety and improves operations, providing clear information can give them a full view of telematics’ advantages for their operation.
Nationwide’s Vantage 360 Fleet program is available at no cost to small commercial auto customers and delivers valuable business insights based on a number of driving factors, including speed limits, hard braking and acceleration, phone distraction and location and trip history. The technology is simple and takes just a few minutes to install. Vantage 360 Premium Partner Program brings comprehensive fleet management and GPS tracking to middle market business customers.
Consumers, businesses agree telematics benefits outweigh concerns
The survey found many consumers (25%) and business owners (37%) who don’t use telematics view data privacy as a barrier but agree that the advantages overshadow those concerns when they’re receiving some sort of discount.
The results reiterate the need for today’s telematics programs to make it very clear to customers how data is being collected and used, and the benefits customers can gain. The driving data collected by Nationwide is used for insurance purposes only and never sold to any third-party entities.
Carriers have an opportunity to step up in addressing these challenges with partners and customers, supplying expertise and resources to better educate drivers on how telematics data is tracked and used and arm partners with resources to help dispel common misconceptions customers may have about telematics.
See also: Driving Into the Future of Telematics
About the study:
Initiated in 2020, Nationwide’s Agent Authority research seeks to understand what business owners and consumers value when buying or renewing insurance policies, explore the different challenges each audience faces around insurance, gauge perceptions of the economy and how each audience is managing uncertainty and find out the actions business owners and consumers have taken as a result of COVID-19 and the conversations they’re having with agents. Previous Agent Authority research reports include: Agent-customer relationship; Small business owner needs and challenges; Middle market business owner needs and challenges; Agents’ top concerns through the pandemic; Consumer and business owner cyber preparedness.