Industry the June 2017 issue

Connected Cars Drive Premiums

A new survey shows consumers are warming to usage-based auto insurance.
By Erin Conway Posted on June 23, 2017

Willingness to share data is a prerequisite for UBI, and Willis Towers Watson found that 81% of respondents said they would be willing or open to sharing recent driving data, and 84% would be interested in or open to having a short trial to determine the discount they could get before buying a policy.

Willis Towers Watson notes that consumers also have to buy into the principle that their insurance will be determined by how they drive. The survey found that only 7% of respondents disagreed with the premise that UBI is a better way to calculate premiums than traditional methods.

Katie DeGraaf, global telematics sales and delivery lead for Willis Towers Watson, believes connected cars are paving the way for the UBI insurance market according to a Willis Tower Watson press release.

In talking with Leader’s Edge about the survey, DeGraaf said the results of the survey show that UBI makes sense to the consumer and is more relevant overall.

“In the past, for example, credit score related to a consumer’s auto insurance. While there are correlations between financial information and risk of driver, it doesn’t seem as relevant to the consumer as information based on where the consumer drives, how fast, when or for how long,” said DeGraaf. “With this technology, it just makes more sense to the consumer.”

And while this survey focused on individual consumers, DeGraaf notes that the technology can be applied across the commercial space as well. “Connections to users’ smart phones can be leveraged to bring prices down,” she said, offering the example of managing a commercial fleet through an app.

The changing behavior in the consumer is important to the insurance industry for many reasons, DeGraaf said, noting that insurance companies need to focus on opportunities that are relevant to a world that connects more and more with technology.

For more on the connected future, check out “Driving You Mad,” on self-driving vehicles and “Digital Mind Field,” on the shifting roles of risk in the digital ecosystem.

More in Industry

A Shot in the Arm
Industry A Shot in the Arm
We can help normalize work with vaccine support.
Industry Connecting the Dots
Q&A with Vikram Mansharamani, Author and Global Trend Watcher
Diversity in London?
Industry Diversity in London?
As the right thing to do (and the smart thing to do) the London risk market fina...