Up to 600,000 young drivers could soon be using telematics insurance policies, new YouGov research shows.
The “Young Drivers: Motor Insurance and Telematics” report sought the views of drivers under the age of 25. It shows that while currently just 4% of young drivers (around 200,000 people) have telematics insurance, this is set to increase to 10% in the next few years.
YouGov found that the new cohort of young drivers who will be passing their tests in the coming year will be taking up telematics insurance at a much higher rate than young drivers who passed their test in the past. Interest in telematics insurance peaks among 17 and 18 year old drivers, where a fifth (21%) either have – or plan to get – such policies.
However, providers of telematics insurance still have some way to go to both boost awareness and understanding of it, with relatively few young drivers having a good working knowledge of the policies. The report found that fewer than four in ten (39%) young drivers have heard of the scheme, although just over half (53%) understand it.
The research found that the key to getting more young drivers to use telematics insurance lies in demonstrating to them that it will reduce their premiums. Seven in ten (70%) young drivers recognise that telematics insurance could leave then with reduced costs based on how they drive their cars. Furthermore, almost half (46%) recognise they may benefit from lower premiums because of when and where their car is driven.
YouGov’s report finds that price was not the only issue for young drivers, however. Six in ten (60%) are concerned about the ways in which their driving data could be used for non-insurance-related purposes.
Jake Palenicek, Director of Financial Services Research at YouGov, says: “For telematics insurance to increase its penetration significantly among young drivers, providers must be able to demonstrate how the policies will benefit them. Principally this will be in the shape of lower premiums – or at the very least certainly not higher premiums – than on a mainstream insurance policy. However, cost savings alone will not be enough to drive penetration further. While premium savings are the main advantage young drivers see in a telematics policy, it is also important for providers to allay potential user’s fears about the use of their driving data.”
Picture from PA