Awareness and enrollment in usage-based insurance (UBI) programshas plateaued, according to the LexisNexis Risk Solutions' "Usage-Based InsuranceStudy," and it's time for insurance carriers to rethink theirapproach to UBI programs. In 2015, about 39% of consumersare aware of UBI programs, up one percentage point from the yearprevious, and up three percentage points from 2013.

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In addition, just 5% of drivers are enrolled in UBI programs—thesame percentage as 2014.

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"Historically in the U.S., usage-based insurance has beendefined as a program to reward good driving behavior withdiscounted insurance premiums, however, offering a premiumdiscount is becoming less attractive to drivers and lesssustainable to insurers," says David Lukens,director, telematics, at LexisNexis RiskSolutions. 

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Time to retool and promote UBI in differentways

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These findings indicate that carriers' current approaches to UBIare no longer sufficient, and that it's time to retool and promoteUBI in different ways, LexisNexis suggests. More than half (52%) ofthe 2,042 respondents to the firm's study say they would be morelikely to enroll in UBI if they were offered a $200 discount intheir insurance deductibles, instead of a 10% discount on theirinsurance premiums.

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"In fact, carriers may not need to rely on discounts in order tobe successful in the consumer UBI market," writes Lukens, thestudy's author. "Messaging around safety may be even more effectivethan a discount-based approach."

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The study found that a "safe-driving concept" has the potentialto keep customers engaged, mitigate risk and improve retention.This hypothetical concept is a smartphone app that measuresconsumers' driving score and provides feedback so they can improvetheir score—with no discount offered. The app would monitor andmeasure driving behavior, such as speed, acceleration, fatigue andphone use. This app could include a leaderboard feature that allowsuers to see how their driving score stacks up against those ofother app users.

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The safe-driving concept also has the potential to keep driversengaged, LexisNexis Risk Solutions reports. If they were to receivean above-average driving score, 67% of respondents say they wouldcontinue to engage with the app to monitor their score and improvedriving. If they were to receive an average driving score, thatnumber increases to 74% and to 77% for those receiving abelow-average score.

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Consumers also are interested in obtaining rewards for gooddriving, such as free oil changes or loyalty points, as part ofenrolling in UBI. 

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(Figure provided from LexisNexis Risk Solutions' Usage-BasedInsurance Study. Click image to enlarge)

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