Telematics is becoming an increasingly important part of the insurance journey for young drivers. As the CII considers what role the insurance profession can play in improving road safety, new Consumer Intelligence data shows just how significant telematics has already become in the market.
The Chartered Insurance Institute's consultation on young-driver road safety comes at a time when telematics is becoming increasingly embedded in the motor insurance market.
Following an inquest into the deaths of two teenagers in a road collision, the CII has been asked to consider how the insurance profession can contribute to safer outcomes for young drivers, with particular focus on the use of telematics. Its consultation is examining not just how telematics is used, but how effectively its potential safety benefits are communicated to young drivers and their families.
Against that backdrop, Consumer Intelligence's latest Motor Daily Price Benchmarking data shows that telematics is becoming much more than a niche part of the motor market.
Telematics is growing faster than the wider market
The number of telematics products available increased from 24 to 31 over the past year, almost 30% growth. By comparison, the number of non-telematics products increased by just under 13%.
But product availability only tells part of the story. Telematics is also becoming increasingly prominent in the results consumers actually see when shopping for cover.
Telematics products accounted for 29% of the top five cheapest motor insurance positions in August, up from 24% a year earlier.
And the shift is particularly pronounced among younger drivers.
For young drivers, telematics is increasingly hard to ignore
For 17 to 19-year-olds, telematics products accounted for 65% of the top five cheapest positions in August. For 20 to 24-year-olds, the figure was 50%, falling to 33% for 25 to 29-year-olds and declining steadily with age.
That means the young-driver insurance market consumers experience when they shop is already substantially different from the wider motor market.
And there is a financial dimension to that too. When telematics does take the top position, the gap to the second-cheapest product is considerably larger than it is for non-telematics products. The average P1 to P2 gap is 18.1% for telematics compared with 7.8% for non-telematics.
So this isn't simply a story about more insurers offering telematics. Telematics is increasingly influencing which products are competitive, particularly for the drivers who face some of the greatest challenges accessing affordable cover.
From pricing tool to potential safety tool
This is where the market data intersects with the CII's road safety consultation.
The growth of telematics has, to date, been driven by a powerful economic proposition: it can help make motor insurance more accessible to young drivers. But its potential role is broader.
If telematics is becoming such a significant part of the young-driver insurance journey, there is a bigger question about what happens beyond the premium: how effectively is the technology being used to help young drivers understand and improve their driving?
Having taken part in the CII roundtable on road safety and telematics earlier this week, Catherine Carey, Head of Marketing at Consumer Intelligence, says:
“The data shows that telematics is already becoming a fundamental part of the young-driver insurance market. But if we are going to have a serious conversation about road safety, we need to look beyond telematics as simply a way of pricing risk.
“The opportunity is to think about how the data, feedback and insight generated by these products can support safer driving, and how we make sure young drivers and their parents understand that potential. The fact that telematics now features so prominently in the most competitive positions for young drivers means this is no longer a niche proposition. It is already a significant part of the journey into motor insurance, and that makes the conversation about what we do with it much more important.”
The next question is what the market does with that position
Consumer Intelligence's data shows a market that is continuing to evolve. Telematics products are growing faster than non-telematics products, their presence in the most competitive PCW positions is increasing, and their prominence is greatest among the youngest drivers.
The CII consultation provides an opportunity to consider what that changing market means beyond price and risk selection, particularly whether the industry's growing use of telematics can translate into a stronger role in supporting safer driving.
For young drivers, telematics is already becoming part of how they access motor insurance. The question now is what the industry does with that position.
See how telematics is shaping your market
Want to see how telematics is shaping competitiveness for your target customers? Consumer Intelligence's Motor Daily Price Benchmarking tracks product positions across age groups, price rankings and PCW results every day. Get in touch to find out how the data can inform your pricing and product strategy.
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