There has always been a sizable proportion of consumers reluctant to use telematics for a range of reasons, including not wanting to have their driving monitored. Aviva’s new telematics policy requires much less monitoring of driving behaviour, which could encourage previously reluctant consumers to sign up as the insurer only requires 400 miles of driving data.
GlobalData’s 2023 UK Insurance Consumer Survey found that a total of 9.2% of motor insurance customers have some form of telematics — 4.7% via an app and 4.5% via a fitted black box.
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A further 10.8% were considering getting a telematics policy. Other consumers were reluctant to embrace telematics for several reasons. A leading factor was people were put off by having to use an app or having a device fitted in their car (cited by 46.3% of those who did not have a telematics policy). This suggests that constant monitoring was unpopular with many people.
Therefore, Aviva allowing consumers to upload just 400 miles’ worth of data before renewal is likely to be popular. It requires far less commitment from the customer and allows them to reduce their premiums by driving especially carefully for a relatively short period.
Telematics is likely to become more mainstream as motor insurance premiums continue to rise sharply in 2024 — according to the Association of British Insurers, they had increased by 25% annually in January 2024. The policy does not require the customer to use the telematics aspect, but they have the option to do so if they want to reduce premiums.
Younger consumers are also more open to telematics-style policies. GlobalData’s survey found that 25.1% of 18–30-year-olds had some form of telematics policy (compared to 9.2% overall), while a further 19.6% were considering one (compared to 10.8% overall). This is likely due to them facing even higher annual premiums and struggling with the ongoing cost-of-living crisis even more than older generations.
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By GlobalDataOverall, making telematics more accessible and appealing to all customers is a positive step. Insurers have found it difficult to control motor insurance premiums over the past year, and this telematics-lite policy could prove popular with those yet to be convinced by having premiums linked to driving behaviour.
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Aviva Plc