Auto-insurance consumers are at once interested in and largelynot purchasing usage-based insurance products, posing a dilemma forpersonal-lines insurers who appear rightfully convinced that amarket for these products exists, if only they could find the rightway to tap into it.

Glenn M. Renwick, CEO of Progressive, outlined the struggle inhis second-quarter-earnings conference call last month. Renwicktold analysts, "I will tell you that getting consumers to engage ina product that, for the most part, they were never asked to engagein…it's a bigger burden than, I think, intellectually, many of usmight have assumed."

But an inability so far to connect with consumers on themessaging front does not mean that drivers are not interested inUBI products, at least according to a recent survey released byTowers Watson. That survey reveals 79 percent of consumers would bewilling to consider a UBI auto-insurance product. The number jumpsto 89 percent if there was a guarantee that a switch to such aproduct would not result in a rate increase. 

Furthermore, 60 percent of those interested, and perhaps mostimportantly 76 percent of younger drivers, said they would bewilling to change their driving behavior if a UBI device wasinstalled in their cars.

These are all good things for insurers offering UBI products.But drivers' interest and intentions do not amount to much if theydon't translate into actual sales.

In his conference call, Renwick reaffirmed his commitment toUBI, stating, "We're not turning back," and adding, "The real issueis we're just going to keep body punching until we find acombination of messages that really makes sense because we thinkthere is still a latent demand out there that, if they knew moreand appreciated the benefits…then we win in a big way."

But what is the right message? Progressive certainly has putthought into its advertising campaign for its UBI product,Snapshot, explaining how it allows good drivers to be judged ontheir own driving merits without having to pick up extra costs for"rate suckers," and rolling out popular fictional spokesperson Floto tout potential cost savings. 

It hasn't been quite enough, though, and Progressive and othersare left wondering how to tap into the "latent demand" Renwickspoke of. 

In a telephone interview, Len Llaguno, a consultant for TowersWatson, provided some perspective on the 79 percent of consumersinterested in UBI. He notes that of that number, about 50 percentshowed very strong interest, while 30 percent, though intrigued bythe concept, would need to know more before taking the plunge.Reaching this latter group, he says, is where insurers mustconcentrate their efforts — tailoring messages to make convincingarguments in favor of UBI.

What exactly does this 30 percent want to hear? Perhaps insurerscan learn from the three biggest concerns consumers have when itcomes to telematics.

According to the Towers Watson survey, the top concern,mentioned by nearly 50 percent of respondents, is that using atelematics device to monitor driving habits would actually lead toincreased rates rather than a discount. 

Here, perhaps, insurers can better explain to buyers exactly howdriving behavior is monitored. For example, maybe people who spenda lot of time highway driving are wondering if rapid accelerationto merge from an entrance ramp would somehow count against them.Those who do a lot of city driving might be concerned that theywould be penalized for the occasional hard brake to avoid one ofthe many obstacles a road crowded with cars, pedestrians andbicycles can throw at them. Consumers may feel that UBI would be atest they can actually study and prepare for if they had moreinformation on what insurers are really looking at when theyanalyze data. After all, 60 percent of interested consumers didindicate they'd be willing to alter their driving behavior; theymay just not be sure exactly how it should be altered.

The second-biggest concern, mentioned by about 40 percent ofrespondents, related to privacy: concerns about insurers trackingdrivers and maybe selling their data to other providers. Thisperhaps dovetails with the larger issues today regarding thetracking and monitoring of behavior by both public and privateentities.  

Full disclosure might be a way to ease concerns in this area.Insurers could relate to drivers exactly what data is and is notcaptured and analyzed. As we see more and more entities explaininghow they collect and use data after some revelation shows up in themedia, insurers can perhaps earn consumers' trust by providing allof the information up front.

In the phone interview, Llaguno says insurers could also offerassurances that consumer data will not be sold to other serviceproviders. He adds that though privacy concerns may be valid, theyare not an insurmountable challenge for insurers. While 40 percentare concerned about privacy, he points out that 80 percent arestill open to UBI.

The third-biggest concern is that a claim may be invalidatedbased on UBI data. Llaguno says insurers might consider pledging tonot use telematics for claims-handling purposes.

Llaguno also mentions consumer interest in value-added services.For example, he says insurers could offer and talk up automaticemergency response, where the telematics device would detect anaccident and automatically notify responders. He says interest inservices like this is already high, and spikes even higher amongparents with kids who drive.

Insurers are committed to UBI and consumers are willing to buy,but insurers have important questions to ask and answer before theycan fully take advantage of the demand. Llaguno says companies thatare experimenting with UBI now and testing various strategies willbe in the best position to take advantage of this potential marketdown the road.