Self-improvement and competitive aspects in usage-based insurance
programs fuel consumer engagement and improved driving
ATLANTA–(BUSINESS WIRE)–According to the 2015 LexisNexis® Usage-Based Insurance Study, U.S.
consumers are more motivated by a smartphone application (app) that
scores their driving than they are by premium discounts when considering
enrolling in a usage-based
insurance (UBI) program. The fourth annual study
conducted by LexisNexis Risk Solutions, a leading provider of data,
analytics and technology, also found UBI programs based on safety offer
the potential to boost adoption, while also engaging consumers,
mitigating risk and improving retention.
“Historically in the U.S., usage-based insurance has been defined as a
program to reward good driving behavior with discounted insurance
premiums, however, offering a premium discount is becoming less
attractive to drivers and less sustainable to insurers,” said David
Lukens, Director, Telematics,
LexisNexis Risk Solutions. “Consumers are looking to measure themselves
and connect with others across all aspects of their lives and driving is
proving to be no different. The benefit to society is the idea that we
can all improve our driving and be safer on the roadways.”
Key findings from the study include:
Demand for UBI programs focused on safe driving exceeds the demand
for premium discounts
In the 2015 study, LexisNexis tested a UBI
safe driving concept or a program, which consists of a smartphone app
that measures driving behavior, scores driving, and then provides
feedback so drivers can improve their score without any discount
offered. Feedback on driving behavior includes speed, acceleration, and
phone use. Estimated demand for the safe driving concept, at 22 percent,
is seven percent higher than a UBI concept or program with a 10 percent
LexisNexis also tested the concept of a leaderboard feature that allows
users to see how their driving scores stack up against those of other
app users, similar to friends and family exercise tracking devices.
However, the interest in proving and improving one’s score appears to be
driven simply by competing with oneself, rather than competing publicly
with others via scoreboards and communities, which appealed to only a
small segment of younger drivers.1
This desire to challenge and compete against oneself also fuels
long-term consumer engagement. With scores that are anything less than
‘above average,’ consumers are likely to stay involved in the program
and continue to improve driving scores and thereby the safety of their
Even when high scores are achieved, consumers are likely to continue to
monitor their driving scores. In fact, 77 percent of consumers said they
would continue to use the app to get feedback even if given a below
average telematics score, implying that the safe driving concept may
have the potential to change driver behavior.
While offering a discount may not be sustainable, a discounted
insurance deductible might be a powerful alternative motivator
Premium discount-based UBI doesn’t appear sustainable. In 2014, 18
percent of respondents expressed interest in participating in a UBI
program with a 10 percent premium discount; in 2015, carriers would need
to offer a 15 percent discount to achieve the same market coverage.
A sizable 52 percent of survey respondents, however, would be more
likely to enroll in UBI if they were offered a $200 discount on their insurance
deductibles versus a 10 percent discount on their insurance premium.
Free value-added services or rewards provide small increases in demand
Over the last several years, some carriers have experimented with
value-added services (VAS), such as emergency roadside assistance,
automatic emergency crash response and stolen vehicle tracking and
recovery, to drive UBI adoption rates.
The research shows that VAS or rewards for good driving behavior, such
as free oil changes, loyalty points or miles, and free roadside
assistance, offer a minimal increase in estimated demand, suggesting
they may not be needed at this phase of the market’s evolution.
Awareness and enrollment of UBI has generally plateaued
While there was a jump in UBI awareness from 10 percent in 2010 to 36
percent in 2013, since then consumer awareness has roughly leveled to 39
percent in 2015. Along similar lines, enrollment in consumer UBI has
held at five percent of households from 2014 to 2015. Knowing the
benefits that telematics brings to underwriting, customer experience and
driver safety, this suggests alternative approaches such as safe-driving
programs or deductible discounts may be necessary.
For more information, download the 2015
LexisNexis® Usage-Based Insurance Study whitepaper.
About LexisNexis Risk Solutions
LexisNexis Risk Solutions is a leader in providing essential information
that helps customers across industries and government predict, assess
and manage risk. Combining cutting-edge technology, unique data and
advanced analytics, LexisNexis Risk Solutions provides products and
services that address evolving client needs in the risk sector while
upholding the highest standards of security and privacy. LexisNexis Risk
Solutions is part of RELX Group plc, a world-leading provider of
information solutions for professional customers across industries.
1 Question: What impact, if any, does including each of these
have on your interest in the Safe Driver App? e.g. The ability to
control and affect your score
2 See Figure 5, 2015
LexisNexis® Usage-Based Insurance Study