The survey finds that while two-thirds of consumers (65%) said they would allow a telematics device to capture their driving behavior if it provided a discount, only 10% of consumers report actually using one.

Nationwide’s survey identified three key themes that shed light on consumer viewpoints regarding telematics and how personal lines agents can provide trusted counsel to their clients about the subject:

1. Consumers need to be educated on telematics; many do not know what it is or why they should consider using it.
2. Many consumers’ privacy concerns dissipate after learning they get a discount.
3. There are misconceptions about the cost and savings associated with participating in telematics.

“Usage-based insurance programs and the personalize rates they can provide are becoming the insurance choice for American drivers,” said Teresa Scharn, vice president of Personal Lines Product Development at Nationwide. “Insurance agents are the best resource to help consumers understand usage-based insurance options, design solutions to fit their needs, and potentially save them money.”

A knowledge gap
Only about a quarter of consumers (27%) say they know what telematics is, and half of those surveyed (51%) saying a lack of knowledge is the key barrier to using telematics.

Nationwide’s survey also revealed:

• 67% of consumers have not discussed telematics with an insurance agent.
• 40% of insurance agents don’t feel knowledgeable enough to speak on telematics to counsel clients.
• Agency owners might feel well versed in telematics, but their staff is less confident:
  • 79% of principals feel they provide employees enough resources
  • 63% of producers say they are provided some or plenty of resources
  • 32% of customer service reps say they are provided some or plenty of resources

“Telematics usage is increasing, and Nationwide expects the usage-based insurance trend to continue,” explains Scharn. “In 2020, customer interest in telematics increased by 30%¹, and Nationwide is projecting 70% (or more) of new business will come from usage-based insurance programs by 2025. Carriers need to provide agents with up-to-date information on the different types of telematics options, including pay-per-mile or safe driving programs, so they can confidently counsel their clients.”

Reminders for agents:

• Clients may not know what telematics or usage-based insurance is. Consider starting your next conversation by gauging their telematics knowledge and asking if they would like to learn more about how telematics can lead to potential cost savings.
• Carriers can provide agency owners and their staff with information and resources to help educate clients about telematics including how to address common objections and misperceptions.

Privacy concerns dissipate when you start talking about a discount
Usage-based insurance programs use driving data to determine whether drivers qualify for a safe driving discount on auto insurance and can provide feedback to help drivers make even safer driving decisions. However, 6 in 10 (62%) consumers have privacy concerns about the information telematics is capturing.However, the survey also showed that this barrier may be easy to overcome and lead to a conversation about telematics discounts as 65% of respondents say they would allow a telematics device to capture their driving behaviors if it provided them a discount.

How agents can address a consumer’s privacy concerns:

• Driving data collected by Nationwide is used for insurance purposes and never sold to any third-party entities. Confirm this is true with your other insurer partners.
• Remind consumers about the cost savings telematics may be able to provide. For instance, drivers that enroll in Nationwide’s usage-based insurance programs are seeing an average savings of more than 20% compared to a traditional policy. SmartRide® is an insurance program that rewards safe driving with a discount up to 40% off. SmartMiles®  is pay-per-mile insurance for low-mileage drivers that offers a flexible rate based on miles driven.

Money matters
The Agent Authority survey highlights misconceptions consumers and agents hold about the cost associated with telematics. A quarter (24%) of consumers who don’t currently use a telematics device believe there is an added cost to using one, and more than half (57%) believe using a telematics product could make their rates go up.

“This emphasizes opportunities for carriers to inform agents and their clients on how usage-based insurance works, and how consumers should be paying for the auto insurance coverage that meets their unique needs,” advises Scharn.

Nationwide’s survey also revealed:

• The rising cost of insurance is a concern for more than half (58%) of consumers. 76% of agents surveyed said the rising cost of vehicle insurance is the top concern among their customers.
• Almost half (49%) of consumers believe telematics can help them save money and are fairly split on how much they think they can save a month with telematics:
  • 32% think less than $10
  • 31% think they can save $10-19.99
  • 15% think they can save $20-$29.99
  • 22% think they can save $30 or more

Reminders for agents:

• There is no cost for a customer to enroll in many usage-based insurance programs—and at Nationwide, SmartRide consumers can only earn added discounts on their policy.
• Help clients understand their options. There are telematics programs that offer a discount based on safe driving or based on the miles they drive.

Key takeaways
Customers can count on their agents to help them become more comfortable with telematics because an agent can:

• Provide information on what telematics is and how it may fit their driving habits.
• Address privacy concerns and help them potentially save money.
• Debunk misconceptions about increased costs.

Learn more: https://www.nationwide.com/personal/insurance/auto/usage-based-insurance

*These insights and more were uncovered through Nationwide’s ongoing Agent Authority research series, which includes samples of independent insurance agents, various business owners, and consumers. Previous Agent Authority research reports: Agent-customer relationship; Small business owner needs and challenges; Middle market business owner needs and challenges; Agents' top concerns through the pandemic; Consumer and business owner cyber preparedness; Middle market business owners telematics.

Survey Methodology:
Nationwide commissioned Edelman Intelligence to conduct a 20-minute quantitative online survey among a sample of 1,600 U.S. independent insurance agents, mid-market business owners with fleet vehicles, and general consumers between June 9 – June 25 to understand what business owners and consumers value when buying or renewing insurance policies, explore the different challenges each audience faces around insurance, gauge perceptions of the economy and how each audience is managing uncertainty, and find out the actions business owners and consumer have taken as a result of COVID-19 and the conversations they're having with agents. As a member of CASRO in good standing, Edelman Intelligence conducts all research in accordance with Market Research Standards and Guidelines.

¹J.D. Power 2020 PULSE survey

The research revealed while 88% of middle market business owners with fleet vehicles trust their agent’s telematics counsel, some agents feel they can broaden their telematics knowledge and sales resources to more effectively advise clients.

“In addition to managing their business, many middle market business owners face the added concerns related to the safety of their drivers and fleet vehicles,” said Pete Frey, director of Commercial Lines Telematics at Nationwide. “The results highlight a tremendous opportunity for carriers and agents to change the conversation around telematics from being a nice ‘add-on’ perk, to what it really has become – an essential tool for operating a fleet-focused business.”

Nationwide’s telematics survey identified four key themes for commercial agents and middle market business owners with fleet vehicles:

1. Agents underestimate business owners’ knowledge and interest in telematics
2. Middle market business owners are ready and willing to invest in telematics
3. Safety and operational benefits are top of mind for middle market fleet owners
4. Carriers/Agencies can better support agents in addressing client concerns

Agents underestimate business owners’ knowledge and interest in telematics
Fleet owners may be more supportive of solutions than agents realize and are willing to pay more to track unsafe driving behaviors than agents anticipate. Additionally, some agents may be misjudging business owners’ primary motivations for using telematics.

• 64% of agents believe they’re knowledgeable about vehicle telematics devices or telematic smartphone apps.
• 14% of agents said they don’t think clients would pay at all for telematics, yet 93% of businesses say they’d pay to ensure a safer driving experience.
• 70% of business owners would be willing to pay between $20-$39.99 per month per vehicle, while more than 60% of agents said they think clients would pay $29.99 or less a month.
• Agents believe distracted driving is the top cause of accidents, but business owners see it differently, citing driving under the influence, driver error, road conditions and weather as leading causes of accidents for their fleet vehicles.

Responses also show some agents would benefit from additional resources to help them talk to commercial lines customers about the advantages of telematics, especially at the producer and customer service representative levels.

• Among the owners that haven’t adopted telematics, their biggest deterrent is a lack of knowledge.
• Nearly 4-in-10 producers and 7-in-10 customer service representatives don’t feel they have the resources needed to effectively counsel clients on telematics.

Quick tip for agents:

• “It’s a good time for agencies to revisit the types of resources and support they provide to team members, especially producers and customer service representatives, to help them effectively discuss the advantages of telematics with clients and how it’s integrated with insurance,” Frey advises. “Also, consider a carrier’s role in the sales or account review processes. In some cases, connecting a client directly with loss control or product experts can offer additional technical expertise to help guide the customer and allow you to focus on other ways to serve them.”

Middle market business owners are ready and willing to invest in telematics
Business owners estimate their fleets experience 7.5 accidents per year, so it’s not surprising their top concerns include distracted driving among employees, accidents with vehicles and the safety of drivers, and knowing the location of their business’ vehicles. Business owners also indicate they’ve done their research and are willing to invest to improve safety, with 86% aware of telematics solutions, a high rate utilizing them, and nearly 90% agreeing the benefits outweigh the financial cost.

• Top concerns for middle market business owners with fleets include: distracted driving among employees (83%); rising cost of insurance for fleet vehicles (82%); safety of employees driving fleet vehicles (81%); driving accidents with fleet vehicles (81%); knowing the location of their business’s fleet vehicles (76%).
• 94% of business owners say telematics helps protect their employees on the road.
• 91% say telematics has a positive impact on operations.
• Business owners believe leading causes of accidents to be: driver error (18%); driving under the influence (18%); road conditions (18%); weather-related causes (17%); distracted driving (15%); and vehicle failure (15%).

Quick tip for agents:

• A variety of telematics and dash cam solutions exist to help your clients prioritize safety. Learn about the different types of telematics offerings your carrier partners offer and how they can benefit commercial fleets.

Safety and operational benefits are top of mind for middle market fleet owners
Fleet owners are safety-focused with 83% offering formal driver safety training at least semi-annually and 90% employing a formal, documented accident investigation process. The operational benefits business owners see from telematics also drive adoption as they place high value on the ability to track vehicle location, evaluate driving behaviors of employees and preemptively identify maintenance needs.

• 45% of business owners believe telematics prevents accidents and insurance claims from happening in the first place.
• Business owners’ top perceived advantages of telematics include: having the ability to track locations of vehicles (48%); evaluating driving behaviors of employees (46%); preemptively identifying problematic vehicle conditions to help avoid costly repairs (43%); and providing a strong risk mitigation strategy for their business (40%).

Quick tip for agents:

• Lean on carrier partners to offer innovative telematics solutions to help drive safety and efficiency in clients’ operations. Many carriers also offer loss control and risk management resources and services, which can have a significant impact with helping improve fleet and driver safety.

Carriers/Agencies can better support agents in addressing client concerns
The survey also highlights a few misconceptions business owners hold about telematics and the difficulties with installing the technology, emphasizing opportunities for agents and carriers to better educate clients on solutions available, how they work, and how they collect and use data.

• Business owners and agents think the telematics data being collected is a privacy concern.
  • 79% of agents feel their clients are hesitant in considering telematics because they think it’s an invasion of privacy; many business owners agree as 37% say privacy of the data collected is a barrier for using telematics.
  • 83% of business owners believe the data captured through telematics could make their insurance rates go up.
• Business owners may overestimate difficulties of implementing telematics technology.
  • Business owners list the cost of investing in telematics (35%) and the time it would take to install the devices (21%) as top barriers for using telematics.

Quick tip for agents:

• “Today’s telematics programs help make it very clear to customers and agents how data is being collected and used, and the benefits customers can gain,” said Frey. “Some carriers, like Nationwide, also offer subsidies or discounts if customers opt to enroll in their programs as well as easy and quick-to-self-install technology. With growing telematics adoption among business owners, agents have a tremendous opportunity to provide needed recommendations and resources to business owners as they look for the right solution for their operation.”

*These insights and more were uncovered through Nationwide’s ongoing Agent Authority research series, which includes samples of independent insurance agents, various business owners, and consumers. Previous Agent Authority research reports: Agent-customer relationship; Small business owner needs and challenges; Middle market business owner needs and challenges; Agents' top concerns through the pandemic; Consumer and business owner cyber preparedness.

Survey Methodology:
Nationwide commissioned Edelman Intelligence to conduct a 20-minute quantitative online survey among a sample of 1,600 U.S. independent insurance agents, mid-market business owners with fleet vehicles and general consumers between June 9 – June 25 to understand what business owners and consumers value when buying or renewing insurance policies, explore the different challenges each audience faces around insurance, gauge perceptions of the economy and how each audience is managing uncertainty, and find out the actions business owners and consumer have taken as a result of COVID-19 and the conversations they’re having with agents. As a member of CASRO in good standing, Edelman Intelligence conducts all research in accordance with Market Research Standards and Guidelines.