With car insurance rates rising sharply in the last few years, providers of all sizes will likely be looking for ways to build loyalty and improve customer experiences in 2024.
But that’s a difficult trick to pull off with prices rising across the board. Customers will be looking for competitive prices and discounts, which aren’t easy to offer in our current landscape.
This somewhat concerning trend has also coincided with a more promising one: the rise of telematics devices, which offer a distinct opportunity for providers. However, these opportunities also have their skeptics, as some drivers cite privacy concerns as a reason they’re skeptical about giving telematics insurance a try.
Still, it seems like the tide is turning, and telematics has a chance to make a real difference in the marketplace. Below, we’ve outlined the biggest advantages — and how providers can best communicate those advantages to their customers.
See also: How Better Data Can Turn Auto Insurance Around
The state of telematics insurance
A recent survey found that more than three in 10 policyholders were hesitant to put a tracking device in their car, citing privacy concerns.
Simultaneously, though, a recent study from Mordor Intelligence predicts that the telematics industry will nearly double in market size by the end of the decade.
As the technology and infrastructure around telematics improve, these devices will continually become a more beneficial option for both providers and their customers. However, it’s up to the providers to emphasize those benefits and quell any concerns.
How telematics can help
It’s clear that car insurance customers, already weary from years of rate increases, will be looking for discounts in 2024.
As ValuePenguin’s annual State of Auto Insurance report shows, car insurance rates in the U.S. are expected to rise by nearly 13% this year. Drivers are currently paying $1,984 a year on average — or $165 a month — and those averages will grow by 2025, largely due to extreme weather damage and rising repair costs.
According to a report from Analytics IQ, a majority of drivers considering dropping their provider cite high rates as the main reason.
In this shifting landscape, price comparisons will likely influence consumer behavior more than ever, which is all the more reason that providers need to attract customers with potentially discount-offering policies like telematics insurance.
While not every driver saves money with a telematics device, all drivers have the potential to do so. Plus, these devices can offer drivers the ability to track their own driving and make improvements — simultaneously building loyalty and lowering their accident risk.
Highlighting the benefits
The simplest way to quell any concern is, of course, to highlight the benefits over the costs. Telematics should be presented as an opportunity for customers — a chance to be rewarded for being a good, safe driver.
One of the biggest points of emphasis here is customer control. With telematics, drivers have an enormous say in how much they pay for insurance, which is not true with many other coverage types.
It’s also worth leaning into the gamification of this benefit. Not only can drivers use telematics to lower their rates and improve their driving, but they can track that information in real time — often through something as simple as a mobile app.
A 2023 report from J.D. Power found that digital service satisfaction is the lowest among insurance customers when they can’t find the information they need on an insurer’s app or website. Telematics offers an opportunity for providers to beef up their digital presence, as well as a plethora of easy-to-access information for customers.
Above all, providers should also let the savings do the talking. In addition to emphasizing that telematics lets drivers “control” their rates, it’s also worth detailing the high, high upside for the safest drivers. Including testimonials or examples of especially low customer rates on your website can demonstrate just how beneficial telematics insurance can be.
Leading with transparency
That said, it’s a mistake to address the positives and pretend that the negatives don’t exist. With research showing that privacy is the biggest concern for drivers who are skeptical of telematics, it’s crucial that providers get ahead of these worries by addressing them head-on.
This can be as simple as disclosing exactly what your telematics devices are tracking and what customer data is being used for.
It’s also essential to make sure that disclosure is easily available for customers — shown right below the long list of benefits — and that your employees are briefed on explaining these details in full.
See also: Oops! The Futurologists Were Wrong
Accepting the skepticism
The reality is that some people will likely remain skeptical of telematics for a long time. That’s OK — there are more than 230 million licensed drivers in the U.S., and the majority will gladly accept the freedom and potential discounts over privacy concerns.
But pushing too hard could turn some customers off completely. Ultimately, it’s better to lead with the benefits, address the skepticism and let the cards fall where they may. Telematics doesn’t seem to be going anywhere, and you don’t have to win everyone over in a day.
