UBI in 2022: Rate hikes drive an upswing in adoption

UBI in 2022: Rate hikes drive an upswing in adoption

Over the past decade, auto insurers have introduced and continuously refined usage-based insurance programs. Powered by telematics technology, which transmits data in real-time (or close to it), UBI promises policyholders some more control over their insurance price in exchange for that data.

As inflation took hold in the post-pandemic era, insurance rates rose along with everything from gas prices to homes to food. That spurred a noticeable amount of interest in, and adoption of, UBI programs. In December of 2021, Nationwide released the results of a survey from summer of that year indicating that as many as half of drivers were interested in UBI. citing costs and safety as their main drivers. However, that same month, only about a third of customers reported that they had been presented with a UBI offer, according to Transunion.

But there was a turnaround. In the company’s first quarter earnings call May 3, 2022, Progressive CEO Tricia Griffith said that the company noticed “a pretty big increase” in take-up of the company’s long-standing Snapshot product. Later, she added that “some consumers are trying to figure out [if] can they change their coverages or do things differently or add Snapshot … to reduce their prices.” 

And in August, Transunion and J.D. Power’s co-reported “Loyalty Indicator and Shopping Trends” study found that in Q1 of 2022, UBI adoption was up by a third, “particularly among those in the lower self-reported credit tiers,” as rates jumped 11.8% overall.

So while economic conditions challenge many aspects of the insurance business, for auto insurers, usage-based products remain a high priority for customer acquisition and retention in a tight market. That leads us to this year’s check-in on where the top auto insurers, by U.S. market share as reported by the NAIC, stand in terms of product availability and size of their program.