Insurers continue to prioritize usage-based insurance in 2023
Customers are increasingly dissatisfied with the cost of their auto insurance, which is likely leading insurance carriers to focus more on usage-based insurance (UBI) options.
Participation rates in UBI programs have more than doubled since 2016, from 8% to 17%, according to the J.D. Power 2023 U.S. Auto Insurance Study. New customers have a UBI participation rate of 26%. Customers do have concerns about UBI. Only 38% of customers responded that the data collected is “always accurate.”
TransUnion released its ‘Insurance Personal Lines Trends and Perspective’ Q2 2023 report, which highlights how more consumers are actually opting-out of telematics programs. The number of consumers who accepted a telematics offer was 53% or 12 percentage points lower than a year ago, at 65%.
Kelly Hernandez, associate vice president, personal lines telematics at Nationwide, said in an emailed statement: “The future holds considerable progression for telematics as insurers will look to place more emphasis based on how safely someone drives. Nationwide is thinking beyond the discount-only pricing programs that customers have come to demand, to positively impacting policyholders driving behaviors and re-shaping how we think about auto insurance.”
The interest in telematics behavior insights will likely continue over the next few years as nearly one in two top ten tier carriers use an exchange-based product, according to the LexisNexis Risk Solutions 2023 U.S Auto Insurance Trends Report.
Adam Pichon, senior vice president of auto insurance and claims, LexisNexis Risk Solutions, said in a statement: “A more competitive advantage can start with better claims handling workflows, better outcomes can be initiated by distracted driving awareness and mitigation, and carriers can begin planning for when the market softens – all with greater clarity helped gained through data insights. Renewals, chargeable violations and improved segmentation are all examples of ways to help improve results using data.”
The details that follow include UBI and telematics program information from the top auto insurers by U.S. market share as reported by the NAIC.
Some insurance carriers didn’t respond to requests for comment and some did not update previous information from 2022.
