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Awareness of UBI programs low among Canadians, but many willing to use telematics for lower premiums


May 28, 2014   by Canadian Underwriter


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A majority of Canadians are optimistic about usage-based auto insurance if it could lower their rates, but awareness of telematics programs remains quite low, according to a new survey from Kanetix.

“Consistent with all the other surveys so far, 18% of Canadians are familiar with UBI and specifically only 2% of that portion is very familiar with UBI,” Andrew Lo, chief marketing officer and chief strategy officer with Kanetix said while presenting the survey results at the Insurance Telematics Canada conference in Toronto Wednesday.

Awareness was highest in Ontario at 22%, and Quebec stood at 16%, although in Alberta, only 6% showed any familiarity with UBI.

The online survey of 1,555 Canadians, which was conducted between April 28 and May 1 by Leger Marketing, included a description of how usage-based insurance programs work.

Based on that, 62% said they were willing to use telematics devices if their premiums could be lowered and 69% said they believe people would drive more safely if they were being monitored to help lower their insurance rates.

While 61% said they believe their car insurance rates would decrease if participating in a UBI program, only 20% said they felt their rates would go up.

“Canadians are super optimistic about this,” Lo said.

In terms of savings, 30% of respondents said they would need to see savings of between $100 and $249 per year on their insurance to switch to a UBI program, and 26% said they would need savings of between $250 and $500 annually.

Among Ontarians, 29% said they would need savings of between $250 and $500 to switch to a UBI program.

Men were also more likely than women to require savings of more than $500 per year to switch, Lo noted.

When it comes to potential challenges around selling UBI, 75% said they were concerned about personal information being stolen, and 73% said they were concerned that their personal data would be used to deny a claim or cancel a policy.

“Sixty-seven percent of Canadians are worried that the device won’t capture their driving habits accurately and so they would be misassessed,” Lo also noted.

Interestingly, 66% also said they were concerned that they would end up paying more for not participating in an insurer’s UBI program.

More than half (52%) also expressed concern than the device itself could void a vehicle’s warranty.

However, 61% agreed that “If an app existed that let me gauge whether a usage-based insurance program would benefit me, I would download it.”

In the coming few weeks, Kanetix will be launching a new smartphone app, DriveSmart by KANETIX.ca, that allows users to view how they drive and get a feel for how telematics might benefit them.

While not tied to any rating system, the app grades the user’s driving, giving them an idea of how UBI works on a smartphone, and provides drivers with a score based on factors such as acceleration, braking and handling, and allows them to view their driving behaviour over certain time periods.

The app also takes into consideration the driver’s speed, when they drive, and for how long, which is factored into their overall driving score. According to Kanetix, drivers with an overall average score over 70 are considered safer drivers, and will likely benefit from a usage-based insurance program.

It also includes gamification features where users can earn “badges” to reward good driving behaviour. 

The Kanetix.ca DriveSmart app will run in the background and automatically detect when the user starts driving – recording any motor-vehicle trips the user takes. The user can view the distance, duration and score for each trip.

The app is completely hands-free with no need to start or stop the app, or have the user check the phone while driving – Kanetix advises that the user’s driving score will be penalized if they do.

“We want to release this for free just to help the whole industry raise the awareness of UBI,” Lo said.

The full survey is available to download free via Kanetix’s SaaS website.