Despite well-publicized concerns over consumer privacy, the popularity of usage-based insurance programs has never been greater. Client inquiries are up for almost 60% of insurance agencies and, perhaps even more surprisingly, agencies themselves are viewing UBI positively too.
According to the 2015 Vertafore Agency Sentiment Survey, independent agents reported a 56% increase in inquiries for usage-based policies and 62% say they anticipate an even greater rise in interest in the next 12 months.
While UBI or telematics programs caused concern when they were first introduced – and still continue to be viewed as a disruptor to agencies – the number of agencies that feel this will prove to be a helpful development has increased.
Roughly 50% of respondents told Vertafore they expect usage-based insurance policies to have a positive impact on the way property/casualty insurance agencies conduct their business. Another 35% anticipate no change from the proliferation of UBI programs, and only 11% say the development will prove to be negative. Five percent had no opinion
This positivity changes somewhat with agency size – agencies earning less than $1 million in revenue are more likely than agencies earning more than $10 million to fear the advent of UBI, with 11% of small agencies saying it will impact business negatively versus 4% of large agencies. However, the percentage who views these programs negatively remains low among agencies of all revenue classes.
The reports are favorable, considering that a growing of number of insurance carriers (between 18 and 20) currently offer UBI policies and public perception of the programs is becoming more positive. While older drivers are still unlikely to adopt telematics, younger drivers view the privacy concerns as less serious and are more willing to sign up for the programs in order to secure a discount on premiums.
And because UBI is in some sense a value-added service, Deloitte analyst John Lucker believes it could help “de-commoditize” the auto product. The greater amount of consumer data available could also serve to support the agent channel.
“Carriers could potentially use UBI data to study the correlation between driving behavior and their risk in the life insurance space or other line of insurance,” Lucker said. “For multiline agents, the opportunity to use this data as a potential predictor from a marketing perspective – that’s something that’s being explored right now. It could be a crossover mechanism for other products.”
