Usage-Based Insurance Nears Tipping Point
As soon as the solution reaches its tipping point of 5% market penetration, it’ll officially be considered a “mass market product.” From that point on, telematics will be “an essential tool in rating risk and pricing,” and usage based insurance “will ultimately become the dominant auto insurance solution.”
How can insurance companies speed the process?
In a new white paper by Insurance Telematics USA 2014, Director of Commercial Auto Telematics at Liberty Mutual Anthony Largo says: the secret could be a good discount.
It makes sense if you think about it. Any new technology is, to some extent, disruptive. It asks people to change, to leave the familiarity of their comfort zone and switch their efforts to a new solution.
Usage based insurance, in particular, requires consumers to let their insurance provider track their driving behavior. They may not want to install a device on their car and they may have concerns about tracking via smartphone.
To make the leap, customers have to know they’re getting something worth the risk – and the promise of great service may not be enough. But a discount? That’s where the usage-based insurance deal gets tempting.
Case in point: the Progressive story
The report goes on to tell the story of Progressive, currently “the undisputed market leader in usage based insurance.” Their strategy was slow, meticulous and extraordinarily successful: the company developed a truly user-friendly device, created a marketing campaign to introduce the solution to their customers, and demonstrated an unswerving commitment to making UBI work.
And the results? In 2010, the year before Progressive started advertising their product, only 10% of consumers were aware of usage based insurance. By 2013, that number had jumped to 35%.
Get the scoop.
Learn the dynamics of the Progressive strategy, find out why smartphones are the “killer app” slated to carry usage based insurance into the mass market, understand the value of “value-added” services and catch a glimpse into the future of UBI. This is a white paper worth reading.
Ready, set, go: click here to visit Telematics Update 2014, where you can download the full report. Also, join us at the conference in September. Make sure to attend our breakout session, “Is Using an OBD Device the Gold Standard for Usage Based Insurance?”