Survey: Rising auto insurance premiums push more consumers to telematics-driven policies

The share of customers opting in to telematics-driven auto insurance coverage has risen by a 3rd over the previous 4 months, as drivers search for methods to keep away from fee will increase and the consequences of inflation, in line with a TransUnion survey launched right this moment.

The survey of two,791 customers carried out between February and March discovered that 40% had been supplied a telematics coverage, up from 32% from the newest survey in November, and that the share of those that had opted in had risen from 49% to 65%.

TransUnion attributed the rise in opt-ins to customers in search of decrease premiums in response to rising insurance coverage charges, which have gone up 4.3% on common, in addition to larger costs generally.

Telematics, which displays driving habits in actual time, guarantees customers decrease premiums in return for demonstrated secure driving. Using telematics by carriers has not been with out controversy; for example, an investigation by Consumer Reports discovered that telematics applications usually have “complicated and opaque” guidelines, and collect extra information than is important.

“It’s clear that prime inflation ranges are impacting shopper wallets, and many individuals at the moment are contemplating new applied sciences that will assist them lower your expenses,” Michelle Jackson, senior director of TransUnion’s private property and casualty insurance coverage enterprise, mentioned in an announcement.

“Clearly customers are getting over worries about surveillance, and carriers are going to wish to plan accordingly,” the survey says.

The survey discovered that cumulative auto insurance coverage charges are up almost 20% for some drivers in Arizona, and that charges have risen sharply in Texas and Georgia as effectively. Shoppers are responding to fee will increase by purchasing for a brand new coverage, TransUnion mentioned.

The survey discovered that the share of customers purchasing for a brand new auto insurance coverage coverage has bounced again from 2021, when provide chain shortages decreased the variety of new automobiles available on the market. It attributed the rebound to 2 components: A need to hunt out decrease premiums, and revenue tax refunds that allowed extra customers to buy a brand new automotive.

Even so, the market is “not experiencing a full-throttle restoration. General, auto stock remains to be very tight in each used and new automotive markets attributable to provide chain points, miserable the automobile gross sales that normally present the primary incentive for insurance coverage buying,” the survey says.

“It seems that auto and property insurance coverage industries discovered some equilibrium this quarter, after a tumultuous 2021,” mentioned Jackson. “Inflation is projected to proceed via 2022, which can seemingly have the twin impact of pricing out customers from new properties and automobiles whereas motivating them to hunt out extra inexpensive protection.”

Though extra customers are purchasing for auto, property, and rental insurance coverage, simply 21% are altering auto insurers, in comparison with 61% and 64% for property and rental insurance coverage, TransUnion discovered.

The survey additionally highlights the shortcomings of on-line and app-based coverage gross sales, with 76% of customers working with an agent earlier than shopping for a coverage, in line with Comperemedia’s 2022 Insurance coverage Omnichannel Tendencies report.

“Shoppers need each the comfort of on-line buying and the human contact, which implies carriers should proceed to supply seamless however easy omnichannel experiences,” the survey says.

That need for human contact echoes different surveys of customers’ attitudes towards the web submitting and dealing with of claims. Most not too long ago, Solera’s annual global survey of attitudes toward the use of artificial intelligence (AI) discovered that just about half of customers surveyed would like a completely digitized course of for settling their collision claims, whereas one other 43% need a hybrid mannequin that mixes digital instruments with human contact.

TransUnion’s quarterly Insurance coverage Purchasing Report is predicated solely on TransUnion’s inner research. The insurance coverage buying traits reported are primarily based on TransUnion’s report, which is derived from TransUnion’s in depth database of credit score information. It contains info on insurance coverage buying transactions from September 2020 to March 2022.

The report focuses on the credit score inhabitants, highlighting TransUnion’s information. It additionally explores a subset of the overall insurance coverage buying inhabitants. The report excludes information from insurance coverage prospects in California, Hawaii, and Massachusetts, the place credit-based insurance coverage scoring info shouldn’t be used for insurance coverage score or underwriting.