Post has teamed up with telematics broking specialist Igo4 for a new quarterly series looking at the growth and trends in this the sector. To kick things off its CEO Matt Munro looks at who is buying telematics policies and where they live.
Interest in telematics insurance continues to mount, and last year policy volumes reached the one million mark for the first time.
Using data accrued from its Wise Driving brand, combined with partnerships with providers such as Hastings Direct, the newly launched quarterly Telematics Watch from Igo4 will aim to provide insight into this market, analysing trends over time around driver scores, the role of telematics in customer engagement and the opportunities for diversification as usage based insurance enters the mainstream.
To launch this new series, this first article sets the scene with the current state of play in terms of telematics uptake.
Who is using telematics?
The gender split for usage based insurance is fairly even at 54% male to 46% female and this universal adoption reflects the wide appeal of telematics as a means of accessing lower premiums, in line with safer driving behaviour.
Telematics insurance policyholders by gender
By far the most significant predictor of who is likely to hold a telematics policy is age, with 79.5% of customers under the age of 29.
Telematics insurance policyholders by age bracket
The percentage of older policyholders is, nonetheless, significant enough to warrant investment in growth of this sector, and it is increasingly being targeted through the development of new telematics products.
Geographically, the north represents the largest proportion of customers with just over 29%; the south and London combined account for just over 25%, while the Midlands represents almost 24% of customers. Again this indicates the broad appeal of telematics insurance, with penetration across the UK.
Telematics insurance policyholders by geographical location
A look at telematics policy data under the management of Igo4 tells a story of consistent percentage growth, month on month, over the past three years.
Month on month percentage growth in live telematics insurance policies
What’s driving the growth?
Clearly, some of this expansion is being driven by consumer trends around the pace of technology adoption in general and growing interest in ‘performance monitoring’ in all areas of life.
Deloitte’s Mobile Consumer Survey 2018 puts smartphone penetration in the UK at 87%. This rises to 96% for the 18 to 24 age group who are most likely to turn to telematics insurance, while the 55 to 75 age group are the fastest growing adopters of smartphones. Overall, ownership of wearables such as fitness bands and smartwatches is growing faster than any other device.
Certainly, when it comes to telematics and driving behaviour, Igo4’s evidence suggests that those who check their data most frequently are likely to achieve the higher scores for safer driving.
Of course, one of the key perceived benefits of telematics insurance is reduced premiums, and the data confirms that premiums have been steadily declining for all age groups.
Average telematics insurance policy premium (net rates) by month
While some of the fluctuations relate to new product launches or initial discounts from insurers, the overall trend indicates growing insurer confidence in the sector.
Future market expansion
It is this context of lower premiums, declining hardware costs, new device options and growing adoption of technology among the older demographic that is fuelling diversification, whether targeting older drivers with low mileage or those with a more chequered driving history.
Insurance providers and price comparison sites alike are investing in campaigns to raise awareness of how telematics is benefiting drivers, across the age spectrum, whether through lower premiums or added value benefits such as theft tracking, and it is this that holds the key to continued growth.
As we drill down into the data over the coming articles, we expect to build a picture of a product that is moving into the mainstream.
- Tokio Marine Kiln Insurance to enter run-off next month
- Direct Line motor head warns of 'dangerous' autonomous vehicle tipping point
- The Post Claims Awards 2019: Full list of winners
- Zurich UK CEO: Ban hands free phone use in vehicles
- Zurich and Travelers discuss digital hype and legacy benefits in new Post webinar
- Ecclesiastical warns of 27% surge in claims following £225,000 church roof theft
- Insurers need to raise awareness on keyless car thefts