Rising premiums and declining customer satisfaction are causing nearly half (49%) of U.S. policyholders to reconsider their auto insurance provider, according to J.D. Power's 2024 U.S. Insurance Shopping Study. The study found that 29% of shoppers have switched to a new carrier in the past year, with Gen Z making the most changes. Some policyholders are concerned that telematics programs are the cause of high rates.
data bias
Usage-based insurance with telematics programs assess risk based on data from an app on the policyholder's vehicle or smartphone. The software tracks speed, acceleration, and braking patterns to assess driver behavior behind the wheel and promises customized insurance premiums based on data analysis. Policyholders can qualify for lower premiums by proving they are safe drivers, but they may be concerned about when and how this information is used and shared. Some people are holding it.
The telematics program looks good on paper. According to MarketWatch, this data can lead to big discounts for better drivers and better habits. However, the data paints an inaccurate picture of drivers and can lead to higher premiums. For example, drivers who drive at night may be subject to penalties as late-night driving may be considered dangerous driving behavior. Michael DeLong, director of research and advocacy for the Consumer Federation of America, told NerdWallet that this disconnect often impacts low-income workers the hardest.
Policyholders who do not know about tracking
The story of a 65-year-old man who believed he was a good and safe driver is a wake-up call for anyone concerned about data privacy and car insurance rates. The New York Times reports that the Lexis-Nexis report, compiled from data collected from drivers' Chevrolet Volts and released by General Motors without their knowledge, has caused drivers to lose 21. % of insurance premiums have increased. Pursuant to the Fair Credit Reporting Act, he was given a consumer disclosure report containing more than 130 pages, summarizing each time the vehicle was driven over a six-month period, including 650 trips. The premium hike and data breach “felt like a betrayal.”
Manufacturers and data brokers often hide consent to tracking driving habits in fine print or privacy policies that most insureds don't read. GM features a telematics program called OnStar Smart Driver. Some GM vehicle drivers have reported being tracked by this technology even when they weren't turned on. A New York Times investigation found that some people say their insurance premiums have gone up because of the data.
Distrust of telematics
According to a Zebra survey of 1,000 respondents who lease or own a car, 40% of U.S. drivers don't know what telematics is. Breaking this number down by generation shows a general distrust of telematics, especially among his Generation Z.
- 62% of Gen Z respondents are concerned about how companies use their personal data.
- 48% of those in the 25-34 age group (younger millennials) are reluctant to share their location data, and 31% do not want to share their driving data.
- 40% of respondents between the ages of 35 and 44 were uncomfortable sharing their driving data, and 54% said they didn't want their auto insurance company to have access to their location data.
- However, 62% of drivers surveyed believe pay-as-you-go insurance is a fair practice.
Despite their distrust of telematics, most Americans believe (and rightly so) that their online and smartphone usage is already being tracked and sold. pCloud's analysis found that Instagram shares 79% of personal data with third parties, Facebook 57%, and LinkedIn 50% of personal data, including location information, with third parties.
Build policyholder trust
Time and time again, consumers value transparency and honesty. Gen Z also seems to value personalization, with 41% of Gen Z respondents in another survey saying they would sacrifice privacy for a more personalized experience. Insurers with clear policies that explain how driver data is collected and used, including customized coverage and rates, could overcome concerns about data sharing, especially among younger policyholders. There is a gender.