Middle Market Business Owners Want Telematics Solutions More Than Agents Realize

Research from Nationwide uncovers opportunities for agents to initiate commercial lines telematics discussions with focus on safety and budget

If commercial insurance agents aren’t considering telematics solutions for their auto clients, they are missing a big opportunity to drive sales and help their customers optimize fleet performance. Telematics solutions present a prime growth area for commercial agents as most middle market business owners welcome the technology and champion its positive safety and operational impacts, according to Nationwide’s new Agent Authority survey*.

The research revealed while 88% of middle market business owners with fleet vehicles trust their agent’s telematics counsel, some agents feel they can broaden their telematics knowledge and sales resources to more effectively advise clients.

“In addition to managing their business, many middle market business owners face the added concerns related to the safety of their drivers and fleet vehicles,” said Pete Frey, director of Commercial Lines Telematics at Nationwide. “The results highlight a tremendous opportunity for carriers and agents to change the conversation around telematics from being a nice ‘add-on’ perk, to what it really has become – an essential tool for operating a fleet-focused business.”

Nationwide’s telematics survey identified four key themes for commercial agents and middle market business owners with fleet vehicles:

1. Agents underestimate business owners’ knowledge and interest in telematics
2. Middle market business owners are ready and willing to invest in telematics
3. Safety and operational benefits are top of mind for middle market fleet owners
4. Carriers/Agencies can better support agents in addressing client concerns

Agents underestimate business owners’ knowledge and interest in telematics

Fleet owners may be more supportive of solutions than agents realize and are willing to pay more to track unsafe driving behaviors than agents anticipate. Additionally, some agents may be misjudging business owners’ primary motivations for using telematics.

• 64% of agents believe they’re knowledgeable about vehicle telematics devices or telematic smartphone apps.
• 14% of agents said they don’t think clients would pay at all for telematics, yet 93% of businesses say they’d pay to ensure a safer driving experience.
• 70% of business owners would be willing to pay between $20-$39.99 per month per vehicle, while more than 60% of agents said they think clients would pay $29.99 or less a month.
• Agents believe distracted driving is the top cause of accidents, but business owners see it differently, citing driving under the influence, driver error, road conditions and weather as leading causes of accidents for their fleet vehicles.

Responses also show some agents would benefit from additional resources to help them talk to commercial lines customers about the advantages of telematics, especially at the producer and customer service representative levels.

• Among the owners that haven’t adopted telematics, their biggest deterrent is a lack of knowledge.
• Nearly 4-in-10 producers and 7-in-10 customer service representatives don’t feel they have the resources needed to effectively counsel clients on telematics.

Quick tip for agents:

• “It’s a good time for agencies to revisit the types of resources and support they provide to team members, especially producers and customer service representatives, to help them effectively discuss the advantages of telematics with clients and how it’s integrated with insurance,” Frey advises. “Also, consider a carrier’s role in the sales or account review processes. In some cases, connecting a client directly with loss control or product experts can offer additional technical expertise to help guide the customer and allow you to focus on other ways to serve them.”

Middle market business owners are ready and willing to invest in telematics

Business owners estimate their fleets experience 7.5 accidents per year, so it’s not surprising their top concerns include distracted driving among employees, accidents with vehicles and the safety of drivers, and knowing the location of their business’ vehicles. Business owners also indicate they’ve done their research and are willing to invest to improve safety, with 86% aware of telematics solutions, a high rate utilizing them, and nearly 90% agreeing the benefits outweigh the financial cost.

• Top concerns for middle market business owners with fleets include: distracted driving among employees (83%); rising cost of insurance for fleet vehicles (82%); safety of employees driving fleet vehicles (81%); driving accidents with fleet vehicles (81%); knowing the location of their business’s fleet vehicles (76%).
• 94% of business owners say telematics helps protect their employees on the road.
• 91% say telematics has a positive impact on operations.
• Business owners believe leading causes of accidents to be: driver error (18%); driving under the influence (18%); road conditions (18%); weather-related causes (17%); distracted driving (15%); and vehicle failure (15%).

Quick tip for agents:

• A variety of telematics and dash cam solutions exist to help your clients prioritize safety. Learn about the different types of telematics offerings your carrier partners offer and how they can benefit commercial fleets.

Safety and operational benefits are top of mind for middle market fleet owners

Fleet owners are safety-focused with 83% offering formal driver safety training at least semi-annually and 90% employing a formal, documented accident investigation process. The operational benefits business owners see from telematics also drive adoption as they place high value on the ability to track vehicle location, evaluate driving behaviors of employees and preemptively identify maintenance needs.

• 45% of business owners believe telematics prevents accidents and insurance claims from happening in the first place.
• Business owners’ top perceived advantages of telematics include: having the ability to track locations of vehicles (48%); evaluating driving behaviors of employees (46%); preemptively identifying problematic vehicle conditions to help avoid costly repairs (43%); and providing a strong risk mitigation strategy for their business (40%).

Quick tip for agents:

• Lean on carrier partners to offer innovative telematics solutions to help drive safety and efficiency in clients’ operations. Many carriers also offer loss control and risk management resources and services, which can have a significant impact with helping  improve fleet and driver safety.

Carriers/Agencies can better support agents in addressing client concerns

The survey also highlights a few misconceptions business owners hold about telematics and the difficulties with installing the technology, emphasizing opportunities for agents and carriers to better educate clients on solutions available, how they work, and how they collect and use data.

• Business owners and agents think the telematics data being collected is a privacy concern.
  • 79% of agents feel their clients are hesitant in considering telematics because they think it’s an invasion of privacy; many business owners agree as 37% say privacy of the data collected is a barrier for using telematics.
  • 83% of business owners believe the data captured through telematics could make their insurance rates go up.
• Business owners may overestimate difficulties of implementing telematics technology.
  • Business owners list the cost of investing in telematics (35%) and the time it would take to install the devices (21%) as top barriers for using telematics.

Quick tip for agents:

• “Today’s telematics programs help make it very clear to customers and agents how data is being collected and used, and the benefits customers can gain,” said Frey. “Some carriers, like Nationwide, also offer subsidies or discounts if customers opt to enroll in their programs as well as easy and quick-to-self-install technology. With growing telematics adoption among business owners, agents have a tremendous opportunity to provide needed recommendations and resources to business owners as they look for the right solution for their operation.”

Survey Methodology:

Nationwide commissioned Edelman Intelligence to conduct a 20-minute quantitative online survey among a sample of 1,600 U.S. independent insurance agents, mid-market business owners with fleet vehicles and general consumers between June 9 – June 25 to understand what business owners and consumers value when buying or renewing insurance policies, explore the different challenges each audience faces around insurance, gauge perceptions of the economy and how each audience is managing uncertainty, and find out the actions business owners and consumer have taken as a result of COVID-19 and the conversations they’re having with agents. As a member of CASRO in good standing, Edelman Intelligence conducts all research in accordance with Market Research Standards and Guidelines.

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