Libertarians…and not.

In a season of relentless speculation on how voters view the nearly 20 total candidates vying for 2016 ballots, U.S. voter motivation has taken on all the trappings of consumer styled surveying, possibly because a hero of the supermarket magazine rack is in the race. While some believe – and campaign heavily – in libertarian thinking these days, voter sentiment might surprise them. One example is found in the conflicts surrounding telematics use and freedom. Big data is a libertarian’s philosophical picnic ground.

Enter voter / consumer sentiment about privacy and the “invasion” of telematics. According to the 2015 LexisNexis® Usage-Based Insurance Study, more consumers are more motivated by a smartphone application (app) that scores their driving than they are by premium discounts when considering enrolling in a usage-based insurance (UBI) program. The fourth annual study found UBI programs based on safety offer the potential to boost adoption, while also engaging consumers, mitigating risk and improving retention. “Historically in the U.S., usage-based insurance has been defined as a program to reward good driving behavior with discounted insurance premiums, however offering a premium discount is becoming less attractive to drivers and less sustainable to insurers,” said David Lukens, Director, Telematics, LexisNexis® Risk Solutions. “Consumers are looking to measure themselves and connect with others across all aspects of their lives and driving is proving to be no different. The benefit to society is the idea that we can all improve our driving and be safer on the roadways.”

In the 2015 study, LexisNexis® tested a UBI safe driving concept or a program, which consists of a smartphone app that measures driving behavior, scores driving, and then provides feedback so drivers can improve their score without any discount offered. Feedback on driving behavior includes speed, acceleration, and phone use. Estimated demand for the safe driving concept, at 22 percent, is seven percent higher than a UBI concept or program with a 10 percent premium discount.

LexisNexis® also tested the concept of a leaderboard feature that allows users to see how their driving scores stack up against those of other app users, similar to friends and family exercise tracking devices. However, the interest in proving and improving one’s score appears to be driven simply by competing with oneself, rather than competing publicly with others via scoreboards and communities, which appealed to only a small segment of younger drivers. This desire to challenge and compete against oneself also fuels long-term consumer engagement. With scores that are anything less than ‘above average,’ consumers are likely to stay involved in the program and continue to improve driving scores and thereby the safety of their driving. Even when high scores are achieved, consumers are likely to continue to monitor their driving scores. In fact, 77 percent of consumers said they would continue to use the app to get feedback even if given a below-average telematics score, implying that the safe driving concept may have the potential to change driver behavior. Premium discount-based UBI doesn’t appear sustainable. In 2014, 18 percent of respondents expressed interest in participating in a UBI program with a 10 percent premium discount; in 2015, carriers would need to offer a 15 percent discount to achieve the same market coverage. A sizable 52 percent of survey respondents, however, would be more likely to enroll in UBI if they were offered a $200 discount on their insurance deductibles versus a 10 percent discount on their insurance premium.

Over the last several years, some carriers have experimented with value-added services (VAS), such as emergency roadside assistance, automatic emergency crash response and stolen vehicle tracking and recovery, to drive UBI adoption rates.

The research shows that VAS or rewards for good driving behavior, such as free oil changes, loyalty points or miles, and free roadside assistance, offer a minimal increase in estimated demand, suggesting they may not be needed at this phase of the market’s evolution.