Insurer and automaker partnerships give telematics a boost
Insurance startup Metromile made headlines for its recent partnership with Ford to offer usage-based insurance (UBI) to the automaker’s customers. Owners of eligible vehicles will be able to sign up for a policy and send their miles driven directly to Metromile. This partnership comes as a lifeline to the insurtech, after hitting speed bumps this year by falling short on sales goals and struggling with low consumer mileage due to the pandemic, forcing the insurtech to lay off staff and nearly cut marketing altogether:
Metromile’s relationship with Ford isn’t the first of its kind and offers a glimpse of where the auto industry is headed. Allstate, Nationwide, and State Farm are among insurers with similar partnerships with original equipment manufacturers (OEMs), leveraging vehicle infotainment centers to deliver the benefits of their UBI programs. Infotainment integration reduces friction for users and insurers, as it doesn’t require the customer to use a plug-in device or download a separate mobile app, and it could provide more accurate data to underwriters.
By having the integration exist in the infotainment center, Metromile and Ford can get around consumer concerns surrounding distracting in-vehicle technology. According to Mintel research on automotive innovations, 60% of vehicle owners said that the latest technology distracts consumers from keeping their eyes on the road. Anything that consumers perceive as an in-vehicle distraction will automatically have lower adoption rates due to the fact that vehicle safety is a top priority.
While telematics programs have grown more sophisticated in recent years, customer adoption is still low. According to Mintel research on property and casualty insurance, less than 20% of U.S. consumers have participated in a program, and less than 40% are interested in trying. A policy discount has been the main value proposition for telematics, but in-vehicle integration could help both insurers and automakers reframe the conversation and increase adoption.
Increasing vehicle safety is always at the forefront of consumers’ minds. Nearly 80% of consumers said they’re interested in an automotive innovation that would make vehicles safer and nearly 70% are interested in vehicle tech that would prove who is at fault in an accident, according to Mintel research on automotive innovations. If Metromile and Ford frame their partnership as an innovative way to ensure safe driving while providing the added bonus of potentially lower insurance premiums, consumers will see this as a win-win and higher adoption rates should occur.