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How UBI drives customer satisfaction

There’s an old saying: “Hit the customer where it hurts – their pocketbook.”  The fact is, people like discounts. They like competing for them, and they like knowing there’s a chance of a discount.

We also know that customer satisfaction with auto insurance is largely tied to the perception of premium price. So, it’s puzzling when all auto insurers aren’t moving full force on UBI as a core offering, especially in light of UBI’s primary value proposition: to provide policyholders the chance to save money.  

For two years running, the JD Power US Auto Insurance Study confirms that satisfaction and retention are higher among customers who opt in to a UBI program. These customers are positively influenced by the chance of a discount on their premium. Plus, UBI programs improve all areas of customer experience.

It should come as no surprise then that the biggest impact in the 2016 study was related to price. However, UBI programs also generated stronger engagement as policyholders became more aware of how their driving directly affected their premium. As a result, customer satisfaction with policy offerings, billing, and payments also increased.

These study results stand the test of time in two ways. First, customers were more likely to renew and recommend an insurer offering UBI, even three years ago. Participating customers were also less likely to shop around for other insurance during the policy’s 12-month term. Once the policyholder proved to be a safe driver and the carrier rewarded them with lower rates, they’d likely stick around. Why take the time to start over with another insurer?

Second, the market had shifted by the time JD Power issued its 2017 Study. At the time, they noted that although overall satisfaction with auto insurance was improving, overall satisfaction with price was declining. Even as the 2017 auto insurance market experienced an overall drop in customer satisfaction tied to the rising price of insurance, JD Power found customer satisfaction scores between 54 and 72 points higher among UBI policyholders – even in the face of premium increases.

Insurers still on the fence about including UBI as a major business initiative should note that the UBI market is projected to be worth $123 billion by 2023–and its consumer base growing from 15 million to 142 million over the same timeframe, according to Allied Market Research.

That’s a lot of pocketbooks to target.

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