Insurance Telematics USA 2015
Trent Goughnour

Insurance Telematics USA 2015

When Will We See Real Adoption in the US?

Trent Goughnour September 28, 2015 Posted in: Blog Posts, Predictive Analytics, Telematics / UBI
This year at the Insurance Telematics USA conference in Chicago, Illinois, there were a variety of presentations regarding the future of telematics, potentials for the devices, smartphone apps, data, and how Usage Base Insurance (UBI) is evolving in the US. The over-arching theme of many presentations centered on adoption, or rather, the slow adoption seen in the US and what can be done to increase acceptance. The insurance industry is focusing more attention on increasing UBI adoption, and statements like “UBI is just around the corner” were repeated throughout the conference. In spite of this, wide adoption seems elusive in the US.

Pinnacle conducted a survey at our booth with a question related to adoption.

One of the questions posed during the survey was “The largest challenge of implementing UBI for an insurance company is…” The possible answers were:
  • Customer awareness & buy-in
  • Data gathering & processing
  • Expense considerations
  • Rate plans & regulators
A majority of survey respondents agree that customer awareness and buy-in are the biggest challenges to adoption.

It seems that awareness is growing around telematics in the US. Progressive has been successful in developing and advertising their UBI programing, and most all of the major carriers in the US offer some form of UBI program.

Customer buy-in was highlighted in many presentations as the reason for the slow progress in the US market and is most likely the true limiting factor in UBI adoption.

Incentivizing the adoption of UBI was discussed at length, focusing on key components such as, discounts, rewards, ease of use, and intangible incentives including safety. David Lukens, Director of Telematics at LexisNexis, presented surveys conducted in the UK, where UBI adoption is much higher. These surveys revealed that premium discounts were not enough for a UBI program to succeed, and a combination of incentives provided the best adoption rate.

Roosevelt Mosley from Pinnacle provided the most insight into reasons why buy-in was fairly slow. Analysis of negative feedback regarding UBI in the US market revealed a general distrust in how the data was going to be used and fears regarding rate increases.

There was also significant discussion on methods of collecting Telematics data for use in UBI programs. The most cost effective approach to collecting data is via smartphone applications, or in combination with onboard devices. This can be accomplished through emphasizing fairness in rating, full discloser as to how the data will be used, gamified rewards programs, and providing multiple device options. That in combination with a variety of methods for delivering UBI, including smart phone applications, should lead to greater adoption in usage based insurance, and easily exceed current projections.

tgoughnour@pinnacleactuaries.com

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