US survey shows high levels of support for usage based insurance

A study of consumers in America demonstrates preference for insurance premiums based on driving standards rather than demographics.

Usage based or telematics insurance products could see an upsurge in the USA based on high levels of support for premiums based on driving standards rather than on demographics that reflect standardised risks based on age group and other factors.

Usage based insurance company Progressive conducted the survey amongst 500 consumers who were asked questions such as if they would share their driving behaviour with their insurance companies if it could lower their premiums and prevent them from paying for other peoples’ bad driving habits. The majority of respondents agreed that UBI is a fairer system of determining premium.

Specifically, the results show that 84% believe higher premiums should be paid by drivers that demonstrate high risk, 80% believe UBI is a fairer option than risk based insurance, 90% of those aged between 18 and 34 showed a willingness to try telematics insurance and more than 50% were unaware that their insurance model was based on standardising risk such that they are likely to be paying for other peoples’ bad driving habits.

According to Dave Pratt of Prgressive, consumers are now becoming more aware of the benefits of usage-based insurance and many new drivers in the country are seeking to find a more personalised insurance rate that provides discounts based on safe driving.

Progressive’s Snapshot system is a Pay-as-you-drive insurance product that adjusts rates based on driver behaviour. Rates can fluctuate up as well as down if driving standards are unsafe and therefore represent higher risk. However, for drivers who cover low mileage and drive more safely, the product can result in significant savings over conventional insurance products.

Usually, car insurance is based on risk factors such as the make and model of the vehicle, the conditions in which it is kept and the age and experience of the driver. Young and inexperienced drivers tend to suffer from the highest premiums and so usage-based telematics insurance is likely to bring the biggest benefits to well-trained young drivers who operate their vehicle responsibly and safely on less challenging roads.

Commenting on the results of the survey, Progressive’s CMO, Jeff Charney stated that people have every right to be angry that they’re paying higher premiums because of the poor driving habits of other road users. With Snapshot, drivers can demonstrate good driving behaviour and get the insurance rates that they’ve earned and which they deserve.

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Legal and Insurance

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