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More than one-third of Americans comfortable with publishing drive habits

September 16, 2014

It seems that car owners across the nation are starting to warm up to the idea of usage-based insurance, according to the Insurance Journal. The publication reported usage-based insurance (UBI), a program that tracks a driver's habits and routines behind the wheel through a telematics device, is gaining traction as consumers are starting to value the safety benefits associated with such a device.

A growing number of drivers are interested in usage-based insurance.

Initially hindered by privacy concerns, auto drivers in the U.S. seem more comfortable than ever with sharing their driving habits with their insurance providers. The Insurance Journal reported the consumer comfort level with sharing individual UBI driving data is 35 percent, which is similar to the comfort level Americans have for sharing sharing online banking data. Surprisingly, Americans now feel more comfortable sharing driving habits than search data (29 percent) and social media personal information (27 percent).

“Smart devices, smartphones and smart cars are converging to create what should be a smart insurance choice for safe drivers and their insurers,” Ellen Carney, principal analyst at research firm Forrester, told Insurance Journal.

Some of the reasons UBI is gaining steam

A recent report from LexisNexis, a business solutions firm, stated safety services are becoming more important to consumers. Nearly half of all respondents—45 percent—said they would like to adopt UBI among cars in their household to see how others in their family are driving. Additionally, there are major concerns among parents wondering how their teenagers drive. Since 2013, interest in tracking how a teenager drives has risen 13 percent among parents. Overall, the appeal of safety features in cars is up. Emergency roadside assistance, stolen vehicle tracking and automatic emergency crash response has climbed by 6 percent since last year.

Carney is surprised that more consumers haven't gotten in on the growing trend because UBI customers tend to pay lower insurance premiums while they can refine their driving skills by looking at their data.

Ash Hassib, a senior vice president of auto and home insurance at LexisNexis, thinks the tide might finally be turning in favor of more UBI.

“Our study has found some of the traditional barriers are beginning to subside, such as the difficulty to use and the fear that insurance companies will have too much personal information,” Hassib told Insurance Journal. “This shift shows us that consumers are becoming more trusting of telematics, and therefore more likely to adopt.”

Another reason UBI should increase among U.S. consumers is because those in the industry expect smartphones to come into play. Towers Watson reported 80 percent of smartphone owners said they would be willing to download UBI apps on their phones to track their driving habits.

The fleets of America

But consumers aren't the only ones attracted to UBI systems. The LexisNexis Insurance Telematics Study showed that commercial fleet managers—companies that make deliveries or rent out cars, for example—are also aware of the benefits.

According to the report, cost savings is the top factor when fleet managers make a decision to embrace UBI into their vehicles. While many insurers are targeting consumers when advertising about UBI, small business awareness among fleet managers is fairly strong at around 25 percent.

“Two-thirds of small fleet managers shop for insurance every two years or more,” Ernie Feirer, general manager of commercial insurance at LexisNexis, told the Insurance Journal. “These fleet managers are looking for ways to save money, and our study shows 27 percent of them would sign up for a UBI program. This leaves a lot of room for growth and a huge opportunity for carriers offering UBI.”