Telematics and car experience
According to past driving records, the "safe driver" discounts offered by auto insurance companies have brought gratifying benefits to drivers and insurance companies. Now, insurance companies go one step further and use real-time driving data to optimize rates and discounts. This transmission of vehicle data, known as "telematics," allows auto insurance companies to more accurately understand what type of driver their customers really are-and the potential costs to pay for them.
While insurance companies have much to gain from leveraging real-time automotive telematics, the majority of consumers aren’t eager to cooperate. In a recent Deloitte report, 74 percent of survey respondents said they would be somewhat reluctant or outright refuse to allow their driving behavior to be monitored. 31 percent of individuals said they would be open to sharing data with the caveat that they received a discount greater than 20 percent – a tall order for insurance companies looking to use driver data.
This consumer hesitancy, along with associated regulation, is hindering insurers from taking full advantage of the data provided by telematics. Instead, insurers are developing “opt-in” programs to capitalize on willing participants and further explore how this data can influence their current business models.
Additionally, insurance isn’t the only sector of auto services that stands to benefit from telematics. Providers of service contracts and roadside assistance plans can also employ these data insights to optimize customer experiences; using GPS to target and locate a vehicles, or tracking vehicle use and driving distance to optimize protection levels, are just a few examples. These kinds of data applications aren’t commonplace yet, but with around 70 percent of auto insurers expecting to use telematics by 2020, they will be soon.
Why the optimism? Well, as we look to the future of telematics and the auto industry, Millennial drivers are projected to open up new opportunities for insurers and service providers. Over 60 percent of drivers in their 20s, according to the Deloitte report, are willing to share data with the auto insurance industry in some form – and Gen Z’s comfort with data sharing should lead to an even larger audience for real-time, data-dependent offerings in the future. “Opt-in” programs are just the start of what’s sure to be a fascinating area to watch.
Scott McLaren is the chief marketing officer of Fortegra with a background in business and communications. He once drove the Saturn VUE Lightship and awarded Saturn Sky to Travis Pastrana, which was the first double backflip in X Games history.
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