Telematics-based policies are increasingly featuring within the top five cheapest results of a quote (especially for under 25s), which will facilitate future growth as price is a key determinant of policy selection.
Telematics brands now dominate the motor insurance market for under 25s, according to Consumer Intelligence. The research agency’s latest Motor Insurance Price Index reports that 49% of the five cheapest quotes found across the motor insurance market are provided by telematics brands for the age group. This compares to 33% in October 2013.
Telematics policies have become increasingly popular among under 25s due to the savings that can be made on premiums. Younger policy holders tend to pay the highest premiums as the most risky drivers, therefore telematics have been a solution to make insurance more affordable.
Price is a key determinant of policy selection, especially as motor insurance is an obligatory product. The presence of telematics policies within the top five cheapest results of a quote is therefore an important consideration for insurers. Our 2015 General Insurance Consumer Survey found that 63.8% of customers always select one of the top five quotes, emphasizing the importance of price in policy choice.
Not only are telematics-based policies increasingly ranking within the top five cheapest quotes for under 25s, but they also have a less pronounced presence across other age groups. The proportion of telematics policies for those aged between 25–49 has risen from 9% to 15% since October 2013. For the over 50s, the proportion has risen to 2% from 1% over the same period.
With telematics brands featuring more frequently within the top results of a quote, it is predicted that the telematics industry will continue to grow, especially for under 25s where the savings benefit of telematics policies is greatest.
By Danielle Cripps, General Insurance Analyst