Online Sentiment Offers Insight into the Future of Usage-Based Auto Insurance
For years now, industry experts have debated whether or not usage based insurance models would take off, and essentially transform the personal auto insurance industry. In this insurance model, a consumer’s driving habits are monitored by a plug-in telematics device and used to uniquely price their insurance policy. This model is a disruptive one that could drastically change the underwriting world for auto insurance if more consumers begin to adopt it.
These telematics devices track specific driving habits, such as frequency of breaking, number of miles driven, and time of day the car is driven. Insurance providers then use this data to assess the risk of each individual driver, and price their policy based on their level of risk. This type of model offers a variety of benefits to consumers, including control over premium costs, an incentive to drive more safely, and a more convenient way to deal with their auto insurance. By simply plugging in a device and practicing safer driving habits, consumers can quickly and easily receive discounts on their auto insurance premiums.
So if the benefits of usage-based insurance are so great for consumers, why are many still reluctant to adopt this new technology? What is preventing many drivers from plugging these devices in order to drive the cost of their insurance down? And for those who have adopted the technology, what is it about telematics that appeals to these drivers? The answers to these questions may help us understand why usage based auto insurance hasn’t quite transformed the industry yet.
Consumer Sentiment about Auto Insurance
At Crimson Hexagon, we turned to social media to get the answers to these questions. We began our analysis by understanding how consumers discuss their experiences with auto insurance today on Twitter. Using the Crimson Hexagon ForSight™ platform, we are able to analyze over 500,000 consumer opinions about auto insurance, and identify the granular drivers of positive and negative sentiment.
In terms of positive experiences, we found that consumers are very vocal about the savings and discounts they receive from their insurance providers (14%). On the other hand, the largest pain points seem to be around cost (31%) and convenience (26%). Many consumers today, especially young drivers, find auto insurance to be extremely expensive. Others find auto insurance to be a huge hassle; shopping for the lowest priced policy is very time consuming, and dealing with customer service is frustrating.
Focusing on Usage Based Insurance Models
So what does this mean for usage based insurance models? How do existing telematics offerings fulfill consumer needs and preferences around their auto insurance? In order to answer this, we took our analysis a step further to see how consumers are discussing the industry’s leading telematics program, Snapshot.
Progressive Insurance released its telematics offering, Snapshot, in 2011 and has continued to adjust its messaging and marketing tactics around the product ever since. However, the simple underlying promise has remained the same: drivers who practice safer driving can save money on their auto insurance premiums. In our analysis of the Snapshot conversation, we find that many consumers are thrilled to see that Progressive is delivering on this promise.
Drivers today are praising and thanking Progressive for the awesome savings they’ve earned with Snapshot (14%). Others are expressing their excitement to begin a Snapshot trial in hopes that they too will reap the rewards. Some consumers even discuss altering their driving habits in an effort to save on their insurance premiums! It is clear that Snapshot’s ability to offer personalized savings is one way in which the device serves the general consumer demand for discounts on auto insurance.
Although we see that consumers associate the ability to improve their driving to receive discounts with Snapshot, we also find that there is a great need for consumer education around the device, even years after its launch. Many consumers (11%) are concerned that installing Snapshot would be an invasion of their privacy rights, even though the device contains no GPS tracking functionality. Other consumers (20%) admit that they simply do not understand how Snapshot works, and question if the device they see on the commercials is even real. We also see that the largest driver of skepticism towards the device is around concerns that Snapshot will reveal poor driving habits and send their rates skyrocketing rather than save them money.
Do you actually plug the snapshot thing from progressive into your car? #confused
— Trevor Oubre (@T_Oubre10) March 23, 2012
These prominent concerns within the Snapshot conversation suggest a need for market education and a potential opportunity for product positioning.
Through the use of Crimson Hexagon’s ForSight platform, we were able to quickly understand some of the major barriers to adoption around a massive disruptive technology within the auto insurance industry. We were able to identify specific needs and preferences that consumers have in regards to their auto insurance in general, and we were able to understand why some consumers have adopted the technology, and why others still have not. These types of insights can help auto insurance companies inform crucial decisions around the launch and product positioning of their telematics offerings.
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