Is Telematics a Catch-All Solution? Not Quite
Gaining a better understanding of how people actually drive — mileage, braking, speeding — has been a primary goal of many auto insurers for years. Having better data allows insurers to make more personalized policies, price premiums more effectively, and be more competitive in a crowded landscape.
When telematics burst onto the scene in the early 2000s, it was viewed as the silver bullet UBI solution. Whether it was a piece of hardware that plugged into the OBD2 port or the more cost-effective smartphone app, telematics promised continuous access to reliable data for insurers while providing a low-effort way for consumers to save money on their policy by agreeing to passively share their driving data.
In reality, telematics has been met with low penetration and adoption rates fueled by consumer attitudes regarding privacy and concerns over not only what is shared but how it is shared. Given that telematics is not the one-size-fits-all solution that was anticipated, we need to consider other solutions that speak to those concerns so auto insurers can still manage to capture valuable data from the majority of their remaining customers that haven’t opted into passively sharing their data.
At Ownli, we believe that an opportunity exists for insurers to empower their customers with more agency over their data. This means giving them full control of what they’re sharing and providing full transparency into how it’ll be used and how it will benefit them.
Telematics — Great on Paper
The whole point of UBI is to create fairness and greater personalized premiums where actual driving behavior is scored and applied to the customer. For insurers, UBI helps to attract better drivers, aids in monitoring specific driving behaviors, rewards the best drivers, and often increases the premium for those considered more risky. Customers willing to share their information in exchange for better premiums can benefit by paying less.
Yet for all the benefits for insurers and customers alike, there are elements of telematics that are just not clicking with most customers. Driver privacy, app adoption and retention, and lacking consumer awareness are often cited as the primary hurdles. This continues to be the case despite discount offers upwards of 30% to 40% on premiums, the rise in remote work, and the current economic environment — all of which should have acted as tailwinds for increased adoption.
Consumer Attitude — We Have Concerns
Consumer research conducted by the American Association of Insurance Services in 2022 showed that 45% of customers are open to UBI. For that 45%, the concept makes sense on paper — receive a more personalized policy that better represents your actual behavior. When customers are faced with the reality of sharing the data needed to power those programs, the results look drastically different.
In a 2022 survey conducted by Policygenius, 68% of Americans would not install an app that collects driving behavior or location data for any insurance discount amount. Year over year, more Americans opt for privacy over insurance discounts.
Gartner found similar results: 79% of customers would like more control over the personal information they give businesses and the way in which it is used, while 53% want businesses to take a more proactive role in teaching them about online data privacy.
Privacy trumps any discount or deal a customer can get from a business. In order to find a path forward that results in a viable solution for both insurers and customers, how that data is being collected and the benefit for the customer must be reconsidered.
The Ownli Approach
We created Ownli because the relationship between insurers and their customers is fragmented. For insurers, there is an opportunity to make the customer the center of the data equation. We’re an equitable data marketplace that connects insurers seeking to create personalized, direct engagements with customers who own their data and proactively seek those engagements.
Insurers can see this shift in mindset with the Ownli Pay-Per-Mile Solution (PPM). The Ownli PPM solution offers an out-of-the-box and regulatory-approved pay-per-mile solution that allows insurers to launch in a matter of days since it doesn’t require any IT integrations or product development cycles.
It also creates a positive recurring feedback loop by putting potential and existing customers in the driver’s seat of their data and incentivizes them to interact with insurers by sharing their certified mileage data on a recurring basis. Rewards and mileage tiers are dictated by our partners and can be customized by state.
Ownli In Practice
Since launching in 2021, Ownli has empowered insurers to deliver a straightforward PPM solution that has had wide-ranging positive impacts on multiple business metrics including reduced mileage, improved retention, and growth.
Through our partners, we have observed 75% nine-month retention with program participants — nine months of certified unique mileage data and nine or more moments of meaningful positive engagement where slim to none existed before.
That continuous positive engagement also benefits renewals: over 70% of surveyed program participants indicated that they are more likely to renew their policy specifically because of the program. Additionally, 88% would switch their insurance company if it provided them the opportunity to earn more. Giving agency to customers over their data and providing small rewards in return can make a significant impact.
For participants, the monthly mileage check-ins provide an opportunity to better understand their vehicle usage. As a result, almost 70% of program participants have exhibited a reduction in mileage, which can have an impact on overall claims frequency. Lastly, 85% requested to add more personal data if they know who is buying it — creating opportunities for cross-selling, up-selling, and bundling of policies.