Insurers perceive telematics app data as incomplete, LexisNexis

Four out of five insurers use telematics data, typically from a smartphone app and nearly half of carriers manage their program through a homegrown app, according to a LexisNexis survey from 2021.

The survey also suggests that insurers are not satisfied with the telematics app data. About 60% of respondents said apps yield incomplete and limited data making insurers less confident in the data and its ability to assess risk. The 2022 LexisNexis U.S. Auto Insurance Trends Report includes 2021 survey results and highlights the advancement of telematics programs and various industry trends. 

“Despite these perceived shortcomings with apps, insurers are generally optimistic about the future of telematics data,” the Trends Report states.

The majority of insurers that were surveyed in 2021, said that telematics will be a part of their core business and 96% said they need to invest in telematics now or risk being left behind in the industry. Policyholders increasingly see the benefit of usage-based insurance programs too, according to the report, many are less satisfied with traditional insurance.

“What continues to surprise us is the fact that 71 percent of consumers are interested in using their driving data for insurance discounts, but only 22 percent have actually used their driving and vehicle data for discounts,” says Marc Gordan, head of global telematics product strategy and development, LexisNexis Risk Solutions, in an emailed response. 

“We believe adoption will increase as more automakers help drive data sharing, and more importantly, as more consumers learn that telematics exchanges can help make their driving data portable, no matter the source or program they’re participating in, to use with any number of insurers – even at the point of quote,” Gordan says.

Telematics exchanges, which include many sources of data from automakers, connected cars and mobile apps, are gaining interest. Only about 30 percent of carriers use telematics exchange data but all respondents were interested in potentially using the data within the next few years.

“Insurers’ interest in telematics exchange capabilities is growing as insurers better understand and grasp the value telematics exchange data brings to their business,” the Trends Report states. “The 2021 survey shows that insurers will use smartphone telematics apps along with exchange data solutions.”

Adam Pichon, vice president and general manager of auto and home insurance at LexisNexis Risk Solutions, said in a statement that some patterns are reemerging for the industry.

“We saw another rollercoaster year due to volatile activity in claims severity, insurance switching, more serious traffic violations, and vehicle purchasing due to macroeconomic conditions,” said Pichon. “Add to that increasing consumer interest in telematics data and an active regulatory and legislative environment, and we are seeing more signs of a revolution in the industry than a rebound.”