Each year, millions of young drivers hit the road for the first time. While insurance is there to protect these freshly licensed policyholders, auto insurance rates for teenage drivers are always higher because as a group they pose a higher risk of accidents than more experienced drivers. This can lead to price shopping on the part of the parents, or worse, many young operators become unreported drivers in a household, a contributor to increasing auto rates across the board.
Independent agents who are embracing telematics, becoming familiar with the different usage-based insurance programs across carriers, and learning how to sell it, are seeing success in client retention and advocacy. Insurers are investing heavily in the technology and telematics programs, leading not only to a more equitable way of rating on behavior, but also a means of helping inexperienced drivers become more aware of their driving behavior and reducing the risk of accidents.
As the agent, when working on an auto insurance quote, ask what other licensed/permitted drivers live in the household and if there are any other drivers of the vehicle(s). Explain that telematics can help young operators gain a more affordable premium based on how they drive rather than just their age and experience.
Addressing concerns. It is important to understand why policyholders have some concerns about this technology. Data is collected through a third-party device that is installed in a vehicle or built into the car itself. These devices provide continuous data collection, leaving some reluctant to participate in the program. Additionally, if someone does not drive safely, telematics can have an adverse effect on their premiums.
Saving on premium is important but taking time to explain the technology and its use helps ease policyholder concerns and goes a long way in furthering the client/agent relationship. If telematics shows a driver is not performing well, the available data can illustrate where the driver is falling short and provide an opportunity to correct that behavior. It is important to communicate to young drivers that premiums are not set in stone, and they can redeem their record using telematics to assist with that process.
Point out the benefits. Telematics programs can vary widely in terms of what behaviors they track and how they calculate discounts, and independent agents are in a unique position to select a program that works best for each household. Clients will likely respond well to the fact that they have some control over their auto insurance premium, and because data is reported in real time, young drivers who drive safely can quickly qualify for future incentives.
Parents benefit from the insights provided through telematics by identifying areas where their newly licensed drivers can improve. Parents can also implement preset rules to receive updates when their young driver is speeding, traveling outside of boundaries and more. Encouraging safe driving conversations with parents is important to holding young drivers accountable for their own safety and the safety of others. Over time, good driving practices become habitual, which can bode well for their future premiums.
While some may be hesitant to embrace telematics, the insights it provides to agents and their clients are unparalleled. As more young drivers get behind the wheel, their safety should be top of mind for their parents. Although they won’t have their guardian or insurance agent riding with them, telematics can help encourage safe driving practices and ensure young drivers have all the tools necessary to stay covered at affordable rates.