Insurance companies have been rapidly pushing telematics- and usage-based insurance plans to get policyholders better rates, especially within the past two years. Driving behavior has drastically fluctuated during the pandemic, and UBI makes it easy to customize rates by driver.
Not only does usage-based insurance support insurers by providing data to more accurately predict risk, but it also gives more control to policyholders in getting lower insurance rates. Other benefits include promoting safer driving habits, improving retention and speeding up accident response time.
Although the benefits of opting into a usage-based insurance policy seem clear, there’s still hesitation around policyholders willing to share their driving data — even if they know it could save them money. In fact, according to a summer study conducted by S&P research, only 9% of insurance policyholders use their UBI mobile app.
The generational divide in UBI
Even though the younger generation has a huge online presence, 62% of Gen Zers worry about how their personal data is being used by companies. According to a telematics survey conducted by The Zebra, 45% of Gen Zers feel uncomfortable sharing their driving data.
Millennials, on the other hand, are more willing to participate in telematics programs and actually think UBI is a better, more accurate way to set rates. According to a survey conducted by Cambridge Mobile Telematics, 73% of 25-39-year-olds were ready to switch to a telematics-based insurance plan. The study also found that readiness for telematics-based insurance in the U.S. has jumped 95% over the course of the pandemic.
The Zebra’s study also found that elder millennials and young Gen Xers aligned more with Gen Z when it comes to sharing data, with 40% saying they were uncomfortable with sharing their driving data.
Despite the mixed attitude around UBI, one thing is clear: the younger generation is looking for coverage now more than ever. Personal auto insurance shopping hit a record high this summer, with Millennials and Gen Z becoming the most active demographics.
Carriers comply with privacy concerns around telematics
One of the biggest challenges around telematics is communicating to customers what data is being collected and how tracking mileage and driving behavior raises privacy concerns among users. In response, some states have enacted legislation requiring disclosure of tracking practices and devices, and some insurers limit the data they collect to maintain transparency, according to the NAIC.
Learn more about how consumers feel about telematics and usage-based insurance in our recent driver report.