There are now many emerging business models that rely on data passing through several platforms, so as to relate in real-time to alerts, new types of insurance products and useful customer services. We have apps for monitoring the smart pet, smart bag or handbag, the smart home with a raft of new alerts and services on the way, and soon to come, apps for elderly care and home automation.

Yet probably the definitive and longest-serving example of data flowing between sensors and machines in the Internet of Things (IoT) is the motor telematics insurance sector.

From our recent research* at LexisNexis Risk Solutions, we discovered that the majority of UK motorists are open to adopting usage-based insurance (UBI) programmes, when the real benefits are explained. The data quality, data availability and hardware cost has been improving many times over since the early period of telematics and retro-fitted vehicle black boxes.

So it is probably one of the great questions for the future of insurance: why has growth of the UBI market continued at a fairly slow pace? Why has telematics insurance marketing tended to get fixated on the young driver segment? What will it take for the insurance industry to spread the benefits, which are becoming fairly well understood in the wider population?

The typical consumer is, after all, is simply interested in trusted and reliable information and a set of product benefits.

In a recent study we surveyed a representative cross-section of just over 3,000 UK motorists on their attitudes to telematics insurance. The results showed the different attitudes to telematics and tracking technology between the genders and different age groups.

We found that consumers generally respond positively to the benefits of a telematics policy: cost savings are the primary motivation, followed by the peace of mind of vehicle tracking, anti-theft benefits, and the use of data to support the motorist in case of an accident or legal claim.

The survey also showed there is a most positive response to telematics benefits amongst the younger and older drivers. However when this translates into actually opting for a telematics policy, this tends to get lost on the older drivers, who appear to be more apathetic to making the switch to new technology.

The inference from this insight is that whilst young motorists are clearly motivated by the savings on their premium in the first few years of driving, older drivers also perceive the benefits, but there is less of a purely financial imperative to switch.

  • 8% of drivers said they are ‘definitely’ interested in a telematics policy today
  • 15% of drivers said they are ‘definitely’ interested, but with a price discount
  • 2% of drivers said they are ‘definitely’ interested, but with help in becoming a safer driver

Overall, 42% of respondents stated that they ‘would be willing’ to buy a telematics insurance policy with some conditions.

Our survey shows there is immediate interest in switching to telematics insurance for over 3 million drivers (8% of the total 39 million UK driving licence holders), with qualified interest from another 6 million motorists. This is over and above the current 0.8 million telematics customers estimated in the market.

So by definition there is a need to identify new types of segmentation and the right ways to communicate value to new customer segments.

More awareness required

Some 50% of the drivers we surveyed said they had some level of concern about how their driving information will be used.

Another 22% said they had general concerns about being monitored whilst driving and 19% were concerned that driving information might get passed onto third parties such as the police (which usually can only happen in the process of court proceedings, and is decided by a judge).

In a previous blog we have commented on data protection, the role car manufacturers in information security, the principle of ‘private by design’, and how they’re already setting rules for distributing data from the connected car.

Clearly there is still a large majority of motorists who are positive or neutral to telematics, but who have unanswered questions, and are not being served in the market.

This research shows the middle age groups were more polarised in their views, but still with interest in cost savings, and with a lower interest in services for becoming a better driver. Neutral views increased amongst the older age groups.

The benefits of telematics for vehicle security and tracking resonated well across most of the spectrum of drivers. But it seems there is still an awareness gap to be filled, or at least a gap in making the right choices more clearly defined for policyholders.

For more insights from these research results download the LexisNexis Risk Solutions white paper ‘Moving the Addressable Usage Based Insurance (UBI) Market’.

*The data mode of collection for the LexisNexis Risk Solutions Telematics Consumer Survey was 3,025 online interviews via the Consumer Intelligence Panel. Respondents were 50% males, 50% females and representative of the driving population across seven age groups (17-19, 20-24, 25-34, 35-44, 45-54, 55-64, 65 and over) and social demographic groups A, B, C1, C2, D, E.

Follow these links for information on the Global Telematics Exchange or the LexisNexis Risk Solutions website for US insurance or UK insurance to find out more about how we support insurers.

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  1. I think the concept is brilliant (I’m 78 years old), but I am very wary of a time in the future when some insurance CEO, or creative accountant, or financial boundary pusher, decides the insurance company can milk the system and the insured, by using the garnered information to shore up revenues. This will happen by say, the mileage being over a declared limit (all annual mileage are estimates because they are the future), or some other nit-picking boundary.
    It is not the system we do not trust, but the people, because history always paves the way.

  2. It will be easy for insurance company to deny a claim if you ever speed in the car and this is logged with the telematics and increase or cancel your premium. Its Big Brother policing your driving.

  3. Telematics for my nephew’s new driver policy included curfew restrictions, driving time restrictions and extra steep mileage costs. Penalties were added at the discretion of the company. Why would anyone want this? The savings benefits were negligible compared to a well-priced standard policy. It just seems another move along the road of thought that ‘people are not capable of doing anything’. Very shortly we’ll all be constrained to playing video games, as everything else will be banned.

  4. My neighbour is 80 and still driving. She shouldn’t be. Would telematics technology pick up on this fact?

    • Mature drivers are more safety wise than the younger ones. No I don’t hug the middle lane on motorways…and no accident in over 35 years.

    • Don’t be ageist. The DVLA give old people huge harassment when renewing their licences, which they have to do every three years. She has every right to drive if she has been proven capable. Don’t take away her mobility based on a generalisation.

  5. This all sounds good apart from:

    The age of a driver should not be taken into account, as [some older drivers] have to take a medical every three years and they have to be able to drive as per DVLA rules.

    Mileage cannot be set as the freedom of driving, as it depends on your job, holidays, and personal lives

    It is not the older drivers who are at fault. Look at all the information and you will find it’s the age group 18 to 35.

    I have been driving for 50 plus years with no speeding tickets, accidents or fines. Does this make me a bad driver?

    All drivers should retake an updated driving test over a set amount of years.

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