Bluefire Insurance

If you sell car insurance, you’re already competing in a market where price is king. Usage-based and telematics insurance give you a different way to win, not by lowering the price across the board, but by rewarding clients for their own driving. The question becomes: How do you sell this type of policy to prospective clients? It’s not exactly as straightforward as selling your traditional bread-and-butter auto policy that meets state liability and property damage requirements. 

This type of product requires some more thinking. In this guide, you will learn how to best position usage-based insurance (UBI) auto policies to a diverse range of clients and how to integrate this sort of marketing into your day-to-day selling activities. Along the way, you’ll also gain a better understanding of the different types of UBI actuarial models, how privacy works in this domain, and how you can interlink discounts and other benefits into your talking points, as well as why you might choose Bluefire as your insurance partner. 

How Telematics and UBI Are Shaping Auto Insurance 

Your clients may have heard of “apps that track driving.” What they haven’t heard, at least not in detail, is how these programs work, who benefits, and what they actually give up in exchange for this type of discount car insurance.  

That’s your opening. Providing that kind of information can go a long way toward establishing trust in these types of innovative products – and in you. This syncs with the future of independent insurance agents and selling unfamiliar, yet beneficial, products to an older clientele. 

What Is Telematics and How Does It Work? 

Data comes from a plug-in device, a phone app, a built-in system in the vehicle or a sticky the car owner places on the windshield. The data transmitted includes speed, braking activity, acceleration, cornering, mileage, and other records, like the time of day and route, to accurately timestamp each activity.  

Carriers then score these parameters along a continuum related to “good” and “unsafe” driving and subsequently adjust premiums based on those behaviors. It’s an extra layer of information for actuarial models beyond mere demographics. The good news is drivers who are safe, obey the speed limits and don’t drive as much can earn discounts on their policies. 

Types of UBI Models 

The main UBI models you might see from an actuarial perspective include PAYD, PHYD, and hybrid models. Luckily, you don’t need a Ph. D. to understand any of these acronyms. In principle, they’re fairly simple, but the devil is in the details. At a high level: 

• Pay-As-You-Drive (PAYD): Low mileage = lower premiums 

• Pay-How-You-Drive (PHYD): Safe driving habits = lower premiums 

• Hybrid: Combines mileage and driving behavior for a more precise rate 

The key point here, again, is to explain to clients that their safe driving skills ultimately lead to a lower insurance premium. That’s the message to reiterate as often as possible, including in printed and digital collateral. 

The Agent’s Role in Promoting UBI 

Direct-to-consumer ads can generate interest, but you make the decision real. You can explain the terms in plain English, match the program to the driver, and remove the friction that keeps them from signing up.  

Educating Clients About Benefits and Risks 

The key is to show you’re not hiding anything. Clients are more likely to say yes when they feel you’re giving them the full picture. Some of the key benefits to promote about UBI include: 

• Savings potential: “If you drive safely, you could see rates drop 10–30% after the monitoring period.” 

• Fairer pricing: “Instead of being lumped into a group, you’re rated on how you drive.” 

• Additional perks: “Some programs include roadside assistance or accident response as part of the package.” 

• Risk disclosure: “Bad driving habits can raise your rates. This isn’t a ‘set it and forget it’ policy.” 

So, there is a sense of needing to balance the pros and cons, but emphasizing the key pros, including cost savings for good behavior, should go a long way toward establishing these products as ideal for your prospects. You may not need to detail these new products as much for younger clients, but learning how to appeal to all age groups is one of the ways you can make yourself highly marketable as an independent insurance agent. 

Identifying Ideal Candidates for UBI 

You don’t offer UBI to everyone. Poor client identification is, in fact, one of the top 10 issues agents face today. So, start with people driving around 10,000 miles per year or less, safe drivers with minimal or no violations, and owners of newer vehicles with telematics systems already built in (think Tesla).  

Your younger drivers may also benefit since it allows underwriters to offset the “youth” premium that most of those policies tend to have. When crafting automated marketing pipelines, focus on these demographics rather than on established drivers who are content with their premiums/policy features. 

Addressing Client Concerns and Maximizing Adoption 

Even the most price-conscious clients may pause before agreeing to a device that tracks them. If you can answer the unspoken questions, you’ll get past the hesitation. Some of the key concerns that you might run into include privacy, transparency, and potential downsides for bad driving. 

Handling Privacy and Data Transparency Questions 

Privacy comes up again and again with UBI. The data collected matters, even if it’s all in the service of safe driving. Drivers want to understand how vehicle telematics are being used. Some of the more effective phraseology you can make use of includes: 

• Explain what’s collected: “Here’s exactly what’s collected: speed, braking, mileage, and driving times.” 

• Explain what’s not collected: “Here’s what’s not collected: audio, video, or personal conversations.” 

• Explain who sees what’s collected: “Only the insurer (and sometimes a tech partner) sees the data, and it’s encrypted.” 

Discounts, Savings Potential, and Loyalty Benefits 

The key talking points around the benefits of UBI include the potential for savings on premiums, any additional discounts you can bolt on to the policy, and other key items like loyalty benefits. Here’s how to position it as an ongoing advantage rather than just a one-time discount: 

• Participation: “Most people see a participation discount right away just for joining.” 

• Comparative advantage: “Safe driving over time keeps your rate lower, even if base market rates climb.” 

• Loyalty for sticking around: “The longer you stay in the program, the more data you have proving you’re low-risk — and that’s leverage.” 

Empower Your Clients and Boost Your Business with Telematics-Ready Insurance Solutions 

Telematics isn’t going away. More carriers are adopting it, and more clients will expect you to explain it. If you can confidently guide them through the details — the good, the bad, and the practical — you’ll be ahead of agents still relying on old talking points. 

Bluefire Insurance can give you telematics-ready products you can start offering now as a producer. That means more competitive quotes, more satisfied clients, and more policies sticking around at renewal.  

FAQs 

What Is Usage-Based Insurance (UBI)? 

Insurance where your premium is based partly on your driving data, including how far, how fast, and how safely you drive. UBI is a rating model where part of the premium is based on actual driving data instead of only demographics or vehicle details. Depending on the carrier, that data can come from a plug-in device that connects to the car’s OBD-II port, a smartphone app that runs in the background while driving, or built-in vehicle telematics (common in newer models). 

Can Usage-Based Insurance Save Money for Clients? 

Yes. Safe, low-mileage drivers often see 10–30% savings after monitoring, plus an upfront discount for joining. Savings can persist long-term if safe driving continues, even if base rates rise in the broader market. 

What Questions Should Agents Ask Clients When Recommending Telematics-Based Insurance? 

Asking up front avoids pitching a program that doesn’t match the client’s lifestyle or privacy preferences. Here are some example questions to ask: 

1. How many miles do you drive yearly? 

2. Do you drive late at night or in heavy traffic often? 

3. Are you comfortable with a device or app tracking your driving? 

4. Is your vehicle compatible? 

What Types of Drivers Benefit Most from UBI Policies? 

Low-mileage drivers, those with a clean record, younger drivers looking for discounts, and owners of newer cars with built-in telematics. It’s worth telling clients: “UBI works best when your driving habits are better than what your ZIP code and age suggest.” That one sentence helps them self-select into or out of the program.