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Watch for Speedbumps on the Road to Location-based Services

Clearly,  there are opportunities for new location based services, including Telematics, or Pay-as-You-Drive for insurers.  However, there are cautions as well.  A recent study by Whitehorse, reported in  eMarketer, provides a reality check.

We’ve blogged about practitioners in large insurance companies that believe that location will be a major trend for insurers.  But location is far from a common function among mobile users.  The eMarketer report data finds that only slightly over half smartphone users surveyed have any awareness of location based applications available to them.  More significantly, only 40% of users had used a location based Apps may have a way to go.

Moreover, the eMarketer report found “the average consumer still has not found a real reason to check in—especially not one that overcomes their concerns about mobile privacy and security.”  As we noted in our previous blog on Telematics, Progressive is taking this issue on in its marketing with lower premiums being held out as the carrot.  On the commercial lines side, we have also noted that risk manager insurance buyers are also being enticed by better control over their risks (understanding driving behaviour of the employees) with Zurich’s implementation of location based fleet management and underwriting.

The reality is that Telematics, and other location based functions, are putting the insurance company in much closer proximity to what was previously ‘private’ information.

Will  consumers be willing to trade privacy for lower premiums or better control?  Would you be willing?

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