Will Consumer Telematics ever become Mainstream?

Telematics is increasingly used to manage company vehicle fleets  and has made considerable inroads into that market. But so far  telematics has signally failed to penetrate deep into the consumer  insurance market.

Despite a 9% rise in telematics insurance policies over the last 18  months, the number of drivers in the UK using so called black box  policies is still a tiny 3.2% of total motorists. While that equates to  323,000 drivers, that still leaves a huge percentage of drivers who    are shunning the GPS tracking policies.

Why aren’t private drivers completely sold on telematics insurance  policies?

The GPS tracking firm, CanTrack, brought some recent research from Consumer Intelligence to our attention that might point to why telematics has failed to take off for UK consumers.

 Reduce your Premiums or No GPS Tracking

Insurance companies use GPS tracking technology to monitor the policyholder’s driving by recording data detailing mileage, braking, speed and times of use. The insurance provider then uses that information to determine the premium of each driver.

According to market research firm Consumer Intelligence drivers are generally interested in using telematics for their insurance with 53% of those surveyed agreeable to such policies.

But that willingness to try was very much conditional with 61% of drivers only interested if it led to a reduced premium while 59% of those surveyed would try GPS trackers only if they were offered money back for safe driving.

 Willing to Change to GPS Trackers but only for the Right Price

Motorists aren’t then against telematics in principle but it has to worth their while for change to occur in the consumer market.

A major obstacle to mainstream acceptance of GPS tracking is data sharing. Older people were far more reticent in providing such tracking information to insurance companies. They could be persuaded but only by substantially reduced premiums, 78% of surveyed drivers would require a price reduction of more than £80.

Indeed motorists are concerned that the data shared through their GPS tracking devices is actually being used to drive up their premiums rather than improving the price of their policies. The benefits of telematics really have to be sold to them.

However even then the telematics research also shows that over two thirds of drivers believe that GPS tracking will never become mainstream for insurance policies with 53% considering that it always be a niche market and eventually become redundant as technology improves.

 Long Live the GPS Tracking Age Difference

How then can insurance companies increase acceptance of telematics?

Targeting different age groups with different tailored policies seems to be the conclusion to draw from this research.

Motorists aged 18 to 24 are already quite comfortable with GPS tracking with 22% of male drivers and 14% of female drivers in that age category already using telematics insurance policies that reward safer driving.

For older drivers however they really only seem to want breakdown care alerts and servicing alerts and are not so keen on sharing their data with insurance companies.

For fleet managers telematics GPS tracking plays an increasingly central role in their vehicle management but there’s still a long way to go before there is mainstream adoption of telematics in the consumer market.

 For All Things Telematics look for CanTrack

For more information on GPS fleet and asset trackers go to cantrack.com.CanTrack is a leading UK provider in the telematics, fleet and asset tracking industry with over 10 years of experience and innovation. Their Vehicle Tracking System is the fastest way to get your vehicles tracked or your money back.