Monitor me, 1 in 3 drivers say

Des Toups

By

Managing Editor

Usage-based insuranceHalf of consumers would let their car insurance company monitor their driving for a discount of 10 percent, a new survey finds, and more than a third would even switch carriers for the opportunity.

The survey of 2,072 insured drivers by analytics provider LexisNexis Risk Solutions finds increasing acceptance of technology to cut the cost of car insurance.

Usage-based coverage, sometimes called telematics, offers the prospect of discounts for those who drive fewer miles, at the safest times of the day or demonstrate extreme caution behind the wheel. That information is typically gathered by devices that plug into the car’s onboard diagnostics system and transmit data back to the insurance company. By far the most widely recognized system is Progressive’s Snapshot, though most major national insurance companies have a program of their own. (See “Pay as you drive discounts.”)

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In fact, the survey found, more consumers were less comfortable with online banking (51 percent), search engines that collect their history (57 percent), or using social networking sites that maintain personal information (61 percent) than they were with the idea of idea sharing their driving data (48 percent) or GPS location with a car insurance company (40 percent).

While the survey indicates widespread willingness to consider telematics, only about 1.4 million drivers have tried Progressive’s program so far. Here are the top 10 factors surveyed consumers said would increase their interest in usage-based insurance:

  • 80% - Ability to opt out without penalty
  • 79% - Receiving a discount
  • 77% - Choosing the information provided to insurer
  • 75% - Control over what you pay
  • 69% - Information saved for a short time
  • 69% - Ability to view driving score
  • 69% - Additional safety features
  • 65% - Information on child’s driving
  • 64% - Collecting accident data
  • 57% - Maintenance alerts

Many of those puzzle pieces are already in place.

Some carriers offer a discount to drivers simply for enrolling, and all allow drivers to opt out of the program. Depending on the insurer, the discount could be based on mileage alone. Others delve deeper, with how hard you accelerate or brake affecting your eventual discount. Most programs allow drivers to see their data online. And Progressive offers a free trial to customers of other insurance companies.

But once enrolled, you can’t choose which data your insurer sees or control how long the data is stored. Currently, insurers say that data from their devices can be used only to reduce rates, not raise them.

The technology can go much further: State Farm recently patented a way to adjust rates based on the specific roads you drive, not just the ZIP code where you live.

Industry analyst ABIresearch predicts 89 million worldwide will adopt usage-based insurance by 2017.

That growth could be enabled partly by the emerging use of smartphones to gather and send data, especially in Europe -- which links the data to a specific driver rather than just to the car.  The LexisNexis survey found 73 percent of consumers viewed the idea of smartphone-based coverage as no more intimidating than programs involving a plug-in device.


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