Telematics Usage Growing in Insurance, Service Providers Maturing
Although overall adoption is still modest, telematics-based offerings are increasingly seen as enhancing customer-engagement: Novarica
Boston, MA (Oct. 20, 2020) – Telematics-based products and services are becoming an important segment of the personal and commercial automotive and fleet insurance markets. While overall penetration is estimated at about 6-8% of insurers’ books, some insurers’ penetration rates have reached 30-35%. In a new report, Telematics in Insurance: Overview and Key Issues, research and advisory firm Novarica examines the current state of telematics in personal auto insurance, including insurer activity, adoption rates, common program features, and the design of telematics-based insurance products.
“Telematics doesn’t have to become dominant to affect consumer expectations around price, convenience, and service,” said Harry Huberty, Chief of Staff at Novarica and author the new report. “Insurers taking a ‘wait-and-see’ approach to telematics should be mindful of the effect that expansion of telematics may have on their books of business as less safe drivers ‘attrition out’ of their competitors’ telematics programs.”
Among the key findings of the report are:
- Overall penetration is about 6-8% of insurers’ books, with some up to 35%. Telematics won’t become dominant in the near future, but some insurers are having substantial successes.
- Value-added services and user experience are becoming more important. Telematics offerings are increasingly seen as customer-engagement opportunities—which requires that insurers support them appropriately.
- Insurers should buy, not build, their telematics capabilities. The solution market is maturing, and insurers should leverage partners when developing their offerings or adding features.
Click here for the table of contents or to access the report.
Report Summary
This report examines the current state of telematics in personal auto insurance, including insurer activity, adoption rates, common program features, an overview of the provider market, and the design of telematics-based insurance products.
Telematics has emerged as a significant segment of the personal and commercial automotive and fleet insurance markets. Overall adoption is still relatively low across the industry, but insurers are having notable successes, some with penetration rates of 30-35%. Insurers have also begun to expand beyond retention discounts to create telematics-backed policies that emphasize rewards, customer engagement, and family safety. Telematics won’t dominate the industry in the near term, but it is here to stay. Insurers should consider telematics strategically, whether or not they ultimately elect to create telematics-based insurance offerings.
Click here for the table of contents or to access the report.
About Novarica
Novarica helps more than 100 insurers make better decisions about technology projects and strategy. Its research covers trends, best practices, and vendors, leveraging relationships with more than 300 insurer CIO members of its Research Council. Its advisory services provide enterprise phone and email consultations on any topic for a fixed annual fee. Consulting services range from assessments and strategic roadmaps to vendor evaluations. For more information, visit www.novarica.com.
Source: Novarica