London, 20 April 2011 – Over two thirds of UK drivers aged over 35 would consider having a telematics monitoring device fitted in their car to save money on their insurance, new consumer research commissioned by Towers Watson has shown. Willingness to potentially participate in a pilot scheme was higher still at 77%.
The research was conducted in the wake of the recent ruling by the European Court of Justice that it will be illegal to use gender as a basis for pricing insurance and pension products from December 2012. As a result of the ruling, a large majority of respondents to the survey said they expected car insurance prices for women to rise significantly.
One solution put forward is to use telematics devices to monitor individual driving behaviour, and possibly other aspects of driving activity such as location, time of day, type of road and weather conditions, so that individuals can manage and influence what they pay for car insurance.
Peter Lee, who is leading the global telematics initiative within Towers Watson said: “The broad assumption has been made that because the gender ruling is likely to have the greatest impact on young women drivers, they will be an obvious customer group for telematics. This research shows that drivers of other ages, both men and women, are open to the idea.”
Installing a telematics device came in second to ‘shopping around’ as a way of saving money on car insurance. Nearly half (48%) selected it as an option, in preference to actions such as reducing the level of cover or increasing the voluntary excess on the policy.
However, consumer interest is tempered by concerns over data privacy. The length of time that an insurance company was permitted to hold data may have a big impact on acceptance levels. If data were to be held for five years, only 11% of respondents said they would be interested in a policy and 55% said they would not. If this retention period was reduced to a month, more than double (23%) said they would potentially buy a policy and only 26% would still reject the idea.
Another key influence on acceptance is the convenience of installing the device. 61% said they would prefer it to be installed for them although over a quarter said they were happy to fit it themselves if it didn�t involve connecting to the vehicle electronics system.
There is a strong consumer preference for insurance providers to offer premium discounts based on how people drive rather than the route used . Proposed premium discounts for low mileage or careful driving were received favourably by over 70% of respondents. This statistic dropped to under 20% for avoiding driving on congested roads.
In relation to the additional services that might be available to drivers as a result of installing a telematics device in their vehicle, more than half said they would be interested – and potentially prepared to pay extra for – theft tracking and automated messages relaying accurate location details in the event of a breakdown or collision.
About Towers Watson
Towers Watson is a leading global professional services company that helps organisations improve performance through effective people, risk and financial management. With 14,000 associates around the world, we offer solutions in the areas of employee benefits, talent management, rewards, and risk and capital management. www.towerswatson.com
