Over the past few years, a new trend in the auto insurance industry that utilizes the latest technology to help set consumers’ premiums has really started to gain in popularity. This type of coverage – known as “usage-based insurance” – tracks people’s driving habits electronically, and has really caught on with the youngest generation of adults in particular. For this reason, it might be wise for insurance agents to start doing a little more to explain why this kind of plan might be more beneficial to drivers of all ages who want to bring their costs down by improving their safe driving habits.
Today, nearly 9 out of every 10 millennials say they at least have an interest in trying out usage-based insurance – known in the industry as UBI – well above the roughly 3 in 4 for other age groups who feel the same way, according to a new survey from Towers Watson. In addition, 72 percent of these young adults believe that if auto insurance were linked more to driving habits than other factors as a better way of doing things than the current system, which also relies on things like age, gender, and in many parts of the country, even credit scores.
“Millennials soundly displayed their acceptance of new business approaches and familiarity with technology,” said Robin Harbage, global lead for Towers Watson’s UBI practice and DriveAbility service offering. “In fact, the survey revealed 92 percent of millennialsâ€‹ own smartphones, compared to just 58 percent of all other age cohorts surveyed. Insurers that are not already embracing new technology will need to adjust their business models for younger drivers, who rely heavily on their smartphones and the Internet.”
Meanwhile, 90 percent of millennials also said that if it comes to “value-added services” for UBI coverage – such as theft tracking, breakdown notifications, etc. – they would be willing to pay an extra $45 per year for those plans, the report said. Only about 65 percent of people in other age groups felt the same way, but it’s interesting to note that parents who are currently paying for their millennials’ insurance costs may be more amenable to this kind of coverage as well, because it helps them better understand their kids’ driving habits.
What can agents do?
The more that insurance agents can do to help their clients understand their plans, and what other coverage options might be available to them, the better off both parties are likely to be. This is because studies show consumers tend to be happiest with their auto insurance when they both understand it and have a good ongoing relationship with their agent or insurer. Therefore, if those professionals can do more to reach out to people on a regular basis, they’re probably going to position themselves well to buoy both their customer service ratings and client retention rates in the future.