New Smartphone Adoption Trends Bode Well for Insurance Telematics

insurance-telematicsRecently, Pew Research released the findings from some surveys that it conducted on smartphone versus broadband adoption in 2015. Two days later, Market Watch published an article on the sustainability (or lack thereof) of automobile ownership, given the high costs and gross inefficiencies. The common thread between the two? Smartphone telematics is hotter than ever. What does that mean for insurance telematics? Let’s take a look.

Smartphone adoption on the rise

Smartphone adoption is remarkably strong right now. Just compare it to broadband. What’s the percentage of Americans with broadband Internet access at home? Pretty much what it was the last time we checked, and that’s big news.

For the first time in 15 years, in other words, the adoption rate for home Internet has plateaued. Actually, it’s dropped: down to 67 percent this year, from 70 percent in 2013. That’s about where it was in 2012. It’s like home Internet just traveled back in time three years.

At the same time, smartphone adoption forges on unchecked. In 2011, 35 percent of American adults owned a smartphone. This year, it’s up to 68 percent, neck in neck with broadband.

Incidentally, we’ve also seen an uptick in the number of Americans who’ve foregone broadband altogether, getting their home Internet exclusively now via smartphone. These smartphone-only individuals were at 8 percent in 2013. Today, they’re at 13 percent.

Bottom line, the balance is shifting. Broadband is slowing down; smartphones are on the rise. In fact, smartphones are actually edging into broadband territory.

Now, no one’s predicting that smartphones are going to replace broadband or make it obsolete. That’s not the point here. What’s remarkable is how thoroughly smartphones have established themselves as a multi-functional, lifestyle-driving, all-in-one tool for an overwhelming number of Americans – to the extent that smartphone-delivered Internet has disrupted broadband, of all things.

Where insurance telematics is concerned, it’s clear which way the wind is blowing. With smartphone adoption this robust, it’s more than strong enough to build a distribution channel on. In fact, it’s crucial.

Automobile adoption unsustainable

In other news, the United States and China consumed around 40 million light vehicles in 2015. By 2020, that number will probably rise to 100 million. “That’s not a lot of cars. That’s an ocean of cars,” said Market Watch Contributor Dan Neil.

Flying in the face of the automobile adoption rate, however, is the rate of automobile utilization. In the United States, utilization is a mere 5 percent. Most of the time, most cars sit parked: an astounding inefficiency.

As for the answer? Ride sharing is one possibility, but according to Neil, that’s just a fleeting first step. What’s really coming down the pike, he said, is the end of mainstream private car ownership altogether.

Neil predicted that within a generation, “automobiles will be endowed with what’s known as Level 4 autonomy – full self-driving artificial intelligence for cars – which will not so much change the game as burn down the casino.” In his future, individuals will be able to summon a car to their location, pay for the miles they use, then bid it farewell. If it comes to pass, this scenario would completely disrupt the way Americans use cars while keeping the role that cars play in society intact.

Do you know what it wouldn’t disrupt? The way smartphone telematics works. Individuals could carry their auto insurance policy with them and enjoy continuous coverage no matter when, where or which type of car they chose: private, connected or shared. And while the world Neil described is at least one or two generations away, smartphone telematics is here, now, delivering coverage with easy efficacy no matter what the driving arrangement, from traditional car-ownership to peer-to-peer ride-sharing.

Bottom line? With each new development that’s rocked automobile insurance in 2015, smartphone telematics has proven itself a viable option again and again. We expect 2016 to be no different. Weighing your insurance telematics options? Check out our previous blog on Smartphone v. Hybrid Telematics.

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