Progressive CEO Glenn Renwick said earlier this year that as much as 40% of the company's customer base is closed off to the idea of usage-based insurance. But Towers Watson's recent UBI Consumer Survey paints a rosier picture.
The survey received 7,645 respondents from seven countries. Seventy-nine percent of the North American respondents said they either would "buy a UBI policy or are willing to consider the concept," according to Towers Watson. Younger drivers were warmest to the product, with approximately two-thirds responding that they would "definitely or probably purchase a UBI policy."
Robin Harbage, global lead for Towers Watson's UBI practice and its DriveAbility service offering, says that insurers must attract consumers with the right messaging and value-added services to make UBI seem like a smart, safe investment.
"Progressive says that 70% of people who try Snapshot are eligible for a discount," Harbage says. "The people who sign up for this are self-selecting. Once you engage them in the process, they'll have better retention and stay with you longer."
Most respondents (60%) said they would be willing to change their driving behavior if they were involved in a usage-based insurance program. But at the same time, half were worried that their rate would go up if they were involved. This means that insurers must embrace transparency: from the impact on a policyholder's rate to the way data is used. Driver feedback has multiple effects, Harbage adds: It has a "cool" factor for the user that they can share with their family and friends, it reassures them what data is being collected and used, and it potentially reduces any risky behaviors they could have.
"You want to display the person's data for them in a web portal and give them some reassurances," Harbage says. "We as an insurance industry have to get better at driver feedback. If we identify 15 behaviors that are high-risk behaviors that we see in certain drivers, we can influence them to better ones."
Towers Watson found that sticking to the speed limit (71%), keeping a safer distance from other vehicles (52%) and driving more considerately (49%) were the leading adjustments consumers were willing to make if they knew their driving habits were being measured.
Notably, even as connected cars are on the rise and smartphones become ubiquitous, Towers Watson found that a car-mounted dongle is the most appealing way to consumers to transmit their data to their insurance companies. Fifty percent more consumers said they preferred this method of data collection than any other, Harbage noted.