Survey: Consumers are primed for telematics apps

Key takeaways 

Consumers are increasingly open to telematics technology in auto insurance, seeking personalized pricing and added value services. This shift presents opportunities for insurers to innovate and deepen customer engagement through data-driven strategies.

• Strong consumer acceptance of telematics apps: 82% of policyholders view telematics apps positively.
• Growing telematics interest across generations: While older drivers show some resistance, that reluctance is decreasing.
• Demand for innovative, usage-based pricing: 60% of respondents are open to switching to usage-based insurance.
• Willingness to share driving data and pay for services: 52% would share driving scores to receive personalized pricing.

Introduction 

The auto insurance industry is at a pivotal moment. Consumer expectations are shifting, prompted by new driving patterns, new technology, and a renewed desire for value. Telematics – well-known as a catalyst for safer driving and better pricing – is table stakes. But contrary to how most carriers think about telematics, this data goes beyond bolstering safety and making pricing more accurate; it’s about creating an overarching data-driven strategy that enables you to rethink customer engagement and value creation.

Recent consumer research by the global insurance think tank IoT Insurance Observatory in partnership with the mobility data and analytics company Arity reveals five critical insights about telematics that every data-savvy auto insurance leader should understand. Taken together, they illustrate the potential of telematics to transform your business, today and tomorrow.

Consumers are primed for telematics apps 

Carriers are increasingly interested in developing telematics apps – and their drivers are ready for it. For insurers, this means that telematics apps are no longer optional; they’re a competitive necessity.

• 82% of policyholders surveyed have a positive opinion of telematics apps
• App adoption is already high among younger users and those with positive sentiment: 66% of respondents already have the insurer’s app installed
• Survey respondents’ most requested services are:
• Rewards for safe driving (45%)
• Emergency assistance such as crash detection (43%)
• Anti-theft features (37%)

The takeaway: Invest in user-friendly telematics solutions that deliver clear benefits, such as discounts and driving feedback, and extend the value proposition with value added services.

82% of policyholders surveyed have a positive opinion of telematics apps 

Telematics: Not just for Gen Z anymore 

Zoomers aren’t the only ones who seek usage-based insurance. As consumer familiarity with telematics has grown, our research says that older generations are increasingly open to adopting telematics.

• Survey respondents over 50 years old show more resistance to telematics than their younger cohorts – but are warming up. Resistance has dropped from 36% to 29% since 2022.
• Older generations prefer familiar pricing models (e.g., tailored renewal with no surcharge) with 29% of Baby Boomers and 40% of Traditionalists choosing traditional plans. Younger users lean toward dynamic models like monthly change or fuel cashback, with 20% of Gen Z and 18% of Millennials favoring fuel cashback.

The takeaway: Segment your telematics offerings messaging by audience. For younger drivers, emphasize convenience, control over their price, personalization and rewards. For older drivers, focus on transparency and discounts while offering basic product education, which can build trust.

Consumers seek auto insurance pricing innovation 

Part of the reason telematics programs resonate with drivers is that it enables insureds to receive more personalized pricing. Drivers want premiums that make sense for their lifestyles and reflect the way they actually drive – not just how people like them drive.

• 60% of survey respondents are open to switching to usage-based insurance (UBI).
• Those surveyed preferred the following pricing models:
• Traditional: 24%
• Tailored renewal (no surcharge): 23%
• Monthly change: 16%
• Fuel cashback: 13%

The takeaway: Cater to customer preferences. Partner with telematics providers such as Arity to enable usage-based pricing programs. Communicate with your driver about how your telematics offer can recognize how he/she actually drives and result in savings.

Consumers are willing to share driving scores for auto insurance discounts 

Not only are consumers open to using telematics apps, but they’re also willing to have their driving assessed with a driving score or to leverage a preexisting driving score to obtain a personalized price. When consumers see the value that those scores can deliver, such as discounts or rewards, insureds feel more compelled to share their driving behavior data. This openness creates an opportunity for insurers to drive telematics adoption and reward safe driving.

• 52.1% of respondents (among those with a positive opinion of the telematics app and open to switch policies) said “Yes” to using a preexisting driving score (from a connected car or app) to get a personalized insurance price.
• Only 16% of those surveyed preferred a flat 22.5% discount for the first coverage period instead.
• 25.4% of survey takers were indifferent, suggesting they may be swayed with the right messaging or incentives.

The takeaway: Build partnerships with telematics providers such as Arity to generate driving scores and subsequent pricing models that work for your drivers and your bottom line.

Monetization beyond discounts 

Although telematics presents new possibilities through discounts and rewards, its value isn’t confined to pricing. It opens doors to value-added services such as roadside assistance. These services can deepen customer engagement and create new revenue streams for carriers.

• 76% of survey respondents are willing to pay at least $5/month for enhanced services.
• Dashcam-based assistance services (like those sold by personal auto carriers in Japan) are attractive
• 43% of those surveyed would pay $9.99/month, and this number increases to 56% if the service is discounted at $4.99/month,

The takeaway: Explore bundled offerings that combine insurance with convenience- and safety-based services.

Conclusion 

Auto insurers can’t afford to ignore telematics – to keep pace with consumers’ lifestyles and their appetites for more accurate pricing, insurers must use telematics to provide the personalized pricing that their customers seek. This right-sized pricing can make the difference between someone renewing their policy – or shopping and switching.

What does this mean for the future of insurance? These consumer shifts suggest a market that is ready for personalization, added value, and innovation. Insurers that act now will not only meet consumer expectations in the short-term but also position themselves as leaders in the long term.

The future of auto insurance is here. Don’t be left behind.

Methodology 

To gain deeper insights into consumer perceptions of telematics-based insurance pricing and their experiences with telematics mobile apps, Arity partnered with the IoT Insurance Observatory to survey 2,059 U.S. drivers who currently hold auto insurance policies and pay for them personally.