28 Feb 2020
Posted in Insurance
Telematics providers must eliminate errors to prevent consumers sticking with trusted brands, says GlobalData
Following the news that a start-up insurtech telematics provider has been recording faulty driving data, which has led to young people being threatened with having their policies cancelled;
Ben Carey-Evans, Insurance Analyst at GlobalData, a leading data and analytics company, offers his view:
“The biggest challenge for insurtechs is making consumers trust them. While they may be able to offer quicker, easier, more digital and even cheaper products, consumers need persuading to move away from established brands.
“This is particularly true in key lines, such as motor insurance. Costs of claims can be high so consumers have to know they are covered properly, and it is not easy to trust start-ups. Bad press could be very damaging to these young companies.
“GlobalData’s 2019 Insurance Consumer survey data suggests consumers are already weary about having their driving assessed. It found that 36.3% of respondents who opted not to have a telematics policy did so because they have an issue with the idea of someone/thing grading their driving ability. This group will be split between those who do not want it because they know they drive fast or that they do not trust the devices to give accurate results.
“However, the damage will more likely be to start-ups, than telematics as a whole. The survey shows that the majority of consumers are willing to use telematics if the savings are clear (64% of non-users would for a cut of 20% or 30%). A rise of high-profile mistakes like this will likely see customers choose established telematics providers such as Aviva or Admiral over less experienced players.”