SWITCHING CONCERNS STOP DRIVERS CHOOSING TELEMATICS POLICIES, EVEN THOUGH IT COULD SAVE THEM OVER £400 POUNDS A YEAR ON INSURANCE
- Telematics policies can save drivers an average of £482 on motor insurance premiums
- A third (34%) would be more likely to choose a telematics policy if they could transfer the black box between providers
- Only 14% of drivers say they would be likely to choose a telematics policy when their insurance comes up for renewal
- Over half (56%) are not comfortable sharing personalised driving data with their insurer
26 February 2018 – Motorists are unwilling to embrace technologies which could make their driving safer and save them hundreds of pounds a year on insurance. New research by comparethemarket.com finds that consumer concerns over data sharing and the inability to switch provider are major impediments to purchasing telematics insurance.
A telematics insurance policy fits a black box to your car, which monitors your driving and sends data to your insurer to provide a personalised quote. This data enables more accurate risk pricing and therefore could reduce premiums for those who demonstrate that they are safe drivers.
The latest findings from Compare the Market’s Simples Lab, an innovation laboratory which helps people simplify their lives when it comes to making financial decisions shows that Only 14% of drivers say they are likely to choose a telematics policy when their insurance comes up for renewal and over a third (35%) did not know it could lower their premium. When asked why they had not switched to such a policy, 17% can’t be bothered to switch to a telematics provider, and over one in ten (13%) had never heard of telematics insurance.
One of the main obstacles to telematics uptake is that many drivers (56%) are not comfortable sharing personalised driving data with providers, as they might be nervous of being badged a bad driver. Of those who have not purchased a telematics policy, nearly one in five (19%) didn’t want to run the risk of their premium going up.
Motorists are concerned that having a box with one provider might mean it is more difficult to move to another provider in the future. A third (34%) of drivers said that if a black box existed which was compatible with a number of insurers, they would be more likely to choose a telematics policy. In the majority of cases, a black box cannot be transferred between telematics insurance providers, meaning customers who switch have to pay to get a new black box installed every time they change insurer, creating inertia in behaviour
Similarly, data gathered by a telematics black box on the quality of driving cannot be transferred between providers, meaning customers who switch provider cannot passport their driving record to their new insurer. A similar number of drivers (35%) said that the ability to passport data would increase their likelihood of switching to telematics.
Missing out on cost savings
Telematics insurance could save drivers an average of £482 a year, but these policies accounted for only 7% of all quotes via comparethemarket.com during 2018, where telematics policies were cheaper than non-telematics policies over a quarter (27%) of the time.
The benefits are even greater for younger drivers aged 17-24, who could pay much higher premiums due to their higher risk profile, as they are deemed less experienced. A telematics policy could save motorists aged 17-24 a staggering £938 and are the cheaper option 68% of the time. Telematics are also far more popular amongst this demographic, accounting for nearly a quarter (24%) of all enquiries. Telematics policies can have cost saving benefits for older age groups too; 4049-year olds could save an average of £516 and 50-64-year olds could save an average of £484.
Head of Motor Insurance
Compare the Market
“There is a common misconception that telematics policies only benefit young drivers, whereas people of all ages stand to save considerable amounts. As the cost of insurance seems set to rise throughout 2019, telematics can offer a great way to avoid expensive premiums so driver scepticism around this technology is worrying. Motorists agree that black boxes could make driving safer and more affordable, but this alone seems not enough of an incentive to switch providers.
Our research suggests that if drivers were able to take their black box with them, over a third more people would consider purchasing telematics and would potentially save a lot of money in the process. For drivers to truly embrace the benefits of telematics policies, the industry must work to fix this interoperability issue and make switching black box providers as easy as possible.”
|Age Group||Average Telematics Saving|
Notes to editors:
Average premiums in this data set are higher than in sets which do not distinguish between telematics and non-telematics policies. When the average premium is given, this usually includes telematics policies so this saving will already be factored in to that premium. The data above compares the cheapest telematics price with the cheapest non-telematics price for that enquiry, therefore the saving is higher.
All data, other than that referenced in the footnotes, is sourced from comparethemarket.com.
Polling data was conducted by Populus in a survey of 2,244 UK adults who own or share a car between the 18th and 22nd of January 2019.
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Comparethemarket.com’s Simples Lab is an innovation laboratory which develops creative solutions to keep consumers’ lives simple, and to reduce the stress and complication of admin when it comes to managing household finances.