With auto insurance premiums increasing by an average of 15%, consumers will look to agents for ways to respond. While independent agents can remarket accounts, the resulting disruption and potential to face increases again with another carrier at the next renewal may necessitate finding another alternative. Carrier telematic programs offer agents a better way to respond.
Telematics Opportunity
Consider the opportunity. According to J.D. Powers (2021 Pulse Survey), telematics participation has increased 30% since 2020. Another survey conducted by Nationwide (Agency Forward) states that “65% of consumers would be willing to use telematics to capture their data if it provided an insurance premium discount”. In fact, Nationwide Insurance projects 70% or more of new business will come from usage-based insurance programs by 2025. Telematics is, and will continue to be, increasingly accepted by consumers.
Telematics provide insurance agents with a way to help consumers lower their premiums. Most carriers offer an initial discount (typically 5-10%) for participating in their telematics program. Once enough time has passed and adequate driving behavior data is collected, some carriers offer as much as 30% in additional discounts for the safest drivers (discounts available and earned vary with driving behavior and carrier program guidelines). Many carrier representatives can provide insurance agents with information about best case, worst case, and on average what a typical client might save.
It allow agents to provide clients with a tool to help them drive better. Beyond the discounts, more information is becoming known about how telematics influences how clients drive. According to a recent article from Travelers’ website “(t)elematics can help drivers by heightening their awareness to their own driving behaviors”.
By helping clients save money and drive safer, agents will see three benefits as a result. First, by helping clients reduce their premium, agencies will notice higher client satisfaction. A recent J.D. Power survey shows that telematics consumers have a higher price satisfaction by nearly 60 points when compared to consumers that don’t utilize telematics. Second, increased client satisfaction will lead to higher long-term renewal retention. Referring again to a recent J.D. Power survey, consumers with telematics are 40% more likely to stay with their current carrier. And finally, considering clients using telematics notice safer driving behavior, their probability of being involved in an accident is reduced, which can lead to an improvement in an agency’s loss ratio.
Summary
Considering the benefits of higher client satisfaction, better retention, and lower loss ratios, independent insurance agents can no longer overlook the value of telematics. It may become one of the more powerful tools to offer clients during the ongoing hard market.
To learn more, CONTACT US at SIA of Northern Ohio today.