Improving auto insurance ratemaking and telematics adoption

Most insurance customers aren’t part of a telematics program — in fact, engagement in traditional telematics programs is under 10%. However, according to J.D. Power, more than one-third of auto insurance customers are willing to try usage-based insurance (UBI). For insurers, there’s a clear disconnect: Why aren’t more customers joining?

Many customers don’t enroll in telematics programs because they don’t reap immediate pricing benefits or feel it’s a hassle to switch their programs. But the same J.D. Power study underscored the significance of discounts. Approximately half of auto insurance customers are willing to change auto insurers in exchange for saving $200 per year or less.

The takeaway? Lower, personalized rates could incentivize more customers to opt into a telematics program. When you price according to real driving behaviors at time of quote and educate customers on the benefit of telematics, you’re able to show safe drivers upfront discounts and increase program adoption.

Lower, personalized rates could incentivize more customers to opt into a telematics program.

Insurers’ pricing and communication hurdles

Traditional telematics-based pricing requires a certain number of trips before insurers are able to provide a quote, slowing the onboarding process. When customers don’t see the immediate benefits of telematics, they’re less likely to jump at the chance to enroll.

Another reason customers are slow to join telematics programs? Customers often fail to understand the value telematics can provide. So, anemic telematics program enrollment means insurers aren’t effectively communicating their program value.

You can boost enrollment and increase retention rates across the board by educating customers on your program’s perks, like accurate pricing, seamless integration, and personalized safe driving tips.

Boost buy-in with fair pricing at quote

While some customers are familiar with traditional telematics programs, others prefer a more modern approach to driving-based pricing. This is where instant pricing comes into play.

Instant telematics pricing can help drivers earn a cheaper rate earlier, enabling you to increase telematics program participation by providing benefits right out of the gate.

Unlike traditional telematics that are disconnected from customers’ driving behavior, instant telematics pricing allows you to instantly identify actual driving risk during the pricing process. Additionally, accurate data collection empowers your drivers to influence their rates based on their behavior.

Unlike traditional telematics that are disconnected from customers’ driving behavior, instant telematics pricing allows you to instantly identify actual driving risk during the pricing process.

Get customers on board with educational resources

Arity educates your stakeholders, agency force, and customers, helping you optimize program design, distribution, enrollment, and onboarding. As a result, you help customers understand that the time it takes to switch programs is worth it.

For a mobile telematics program, Arity research shows about a 50% take rate on average when offered, but oftentimes, it is not offered at all. When it is suggested as a benefit to a driver, the take rate can be as high as 75%. This tells us that stakeholder engagement is VERY important for adoption. Agents need education on what’s involved in the process as well as the value proposition to them and their potential policyholders. Younger consumers, the more tech-savvy, and price-sensitive people tend to raise their hand and say, “I would be interested in a telematics program,” and it may be that currently, agents are mostly responding to those people only. Arity research shows that interest is much larger than this narrow demographic.

Beyond insurance ratemaking, we offer the tools and resources you need for buy-in and industry-leading take rates. This includes program design, distribution, and enrollment best practices. At Arity, we find that our clients who have dedicated in-house resources — budget, time, and resources — to deploy a telematics program are most successful. This means there is someone in-house who is in charge of making it successful. We guide agents and help them explain the value of telematics to their customers. This is key for increased adoption — pricing based on driving behavior differentiates you from competitors in the minds of potential customers.

When your team understands the ins and outs of your telematics program, communicating your value proposition to end-users becomes second nature.

Increase program adoption with Arity

Even if you have the building blocks of a successful telematics program in place, you need internal and customer buy-in to achieve actual results. Arity partners with you, giving you the tools to engage and educate agents and customers, helping you promote wide-scale program adoption.