Many of us working in the connected car space are searching for explanations for the slow consumer adoption of telematics-enabled, usage-based insurance, or UBI, programs, especially as more new vehicles are embedded with connectivity, which helps power personalized insurance policies and can benefit customers.
Although insurers have widely embraced data, including driving and vehicle data or telematics data, to price policies and manage claims risk, consumer-driven usage has yet to truly expand. But as both vehicle and telematics technologies evolve, I believe we need to engage a key player often missing in the conversation to help customers discover the benefits of using their data for insurance: automakers.
In our latest U.S. Consumer Survey, conducted in December 2021, we found that 67 percent of respondents are aware that their driving and vehicle data can be used for insurance discounts. However, only 22 percent of consumers have used their data for discounts on their insurance premium.
Based on the survey results, consumers can see the value of using their driving and vehicle data but may struggle to engage in UBI programs. So, how can automakers help their customers take advantage of their telematics data?
Automakers, in fact, already play a significant role in supporting their customers’ engagement in UBI programs. They are enabling consumer participation through embedded connectivity, which allows the collection and transmission or sharing of vehicle and driving behavior data. They are also partnering with insurance companies and other third parties to find optimal opportunities to leverage their vehicle and driving data. Automakers are certainly engaged in delivering a more personalized experience for their customers.
But they can do more.
As a starting point, automakers can help by informing customers they can participate in UBI programs regardless of the year their vehicle was manufactured and whether it is connected.
However, more and more automakers are designing their new vehicles with embedded connectivity, providing a connected car experience for their drivers. This embedded connectivity and the resulting data represent an exciting new data source for UBI programs.
For the millions of older vehicles without embedded connectivity, automakers can still help deliver connectivity for their drivers through an aftermarket app, or an SDK-enabled vehicle companion app, that supports telematics data collection. Telematics data captured through aftermarket devices can be equally applied to UBI programs.
Our 2021 U.S. Consumer Survey also indicated that among respondents who had not used their driving and vehicle data for potential auto insurance discounts, 71 percent said they were interested in doing so. Lower auto insurance premiums can help reduce the overall cost of vehicle ownership, which in turn can help fuel the car-buying life cycle and owner brand loyalty — benefiting everyone, including automakers.
Another reason automakers should educate their clients about UBI is that engagement creates an opportunity to continue to build and strengthen customer relationships and brand loyalty. It is reassuring to know your vehicle manufacturer is focused on helping its customers participate in UBI programs for potential auto insurance discounts and have greater control over their data and, ultimately, their insurance costs.
One concept automakers need to understand and emphasize, in the best interests of their customers, is data portability.
How it works: Consumers engage with their automaker for connected services. With connectivity, consumers can opt in or follow a similar process to use and share their telematics-based driving behavior data with insurers for insurance purposes.
When automakers engage with a partner-managed telematics exchange, consumers’ driving behavior data can become portable. The consumers, then, can use their data whenever they wish to shop their auto insurance policy with other carriers. Whereas when consumers participate in a 1:1 program with a specific insurer, they do not have the ability to share their driving data with other insurers for potential rewards or discounts.
By participating in a well-managed exchange, automakers create the opportunity for consumers to receive offers and quotes from insurers upfront based on their individual driving behavior eliminating the need for a complex UBI trial and monitoring period.
With telematics exchanges and automakers’ participation in such exchanges, we have seen remarkable growth and scalability to help consumers, automakers and insurers leverage driving data.
With increased connectivity, from a car, an aftermarket app, or an SDK-enabled vehicle companion app, better enabling the collection of telematics data, the relationship between automakers and customers now extends far beyond the gates of the dealership or the walls of repair shops.
Proactive engagement to help vehicle owners be aware, take the option and leverage their driving and vehicle data allows automakers to continue to develop and build more meaningful relationships with customers, creating opportunities to enhance loyalty and keep them within the brand.
The entire vehicle life cycle, from vehicle purchase to connectivity features and services to maintenance, insurance and operations, can significantly benefit from greater consumer engagement and insights, especially at pivotal moments, such as when existing customers decide to buy a new car.
Are you confident they will stick to your brand? It is time to act to make sure consumers remain loyal.