NEW YORK: Usage-based insurance (UBI) is gaining ground in the US automotive segment, with millennials proving especially enthusiastic about these personalised product offerings, a study has found.

Nielsen, the research firm, drilled down into this emerging category – where insurers can link actual driving data to policies via apps and connected in-car systems – in a new report.

And it stated that the primary policy for 20% of US households now features UBI components, compared with 13% in 2013. And that figure should reach 33% by 2020, when 90% of new cars will incorporate the necessary tracking technology.

"UBI allows insurance carriers to monitor customer driving habits through a telematics device. This information can be collected by installing a device to a vehicle's on-boarding system or through pre-installed telematics," the study said.

"Consumers who take part are given an accumulating discount at each renewal, normally between 5% and 30% off their premium."

Upscale millennials, with a household income topping $75,000, were the most enthusiastic about these policies, being 79% more likely to use tracking devices from their insurance company in exchange for discounts.

This total stood at 44% for the millennial audience as a whole, measured against 25% for their older counterparts in Generation X.

Boomers, by contrast, proved 24% less likely to have adopted these policies – a score standing at 29% for members of the "Silent Generation".

And while this developing policy model may impact existing industry revenue streams, it also gives providers the chance to innovate.

"By collecting this information, insurance carriers are able to analyse real-time data compared to predictive risk modelling from actuaries based on number of statistics," the study said.

"This allows companies to develop new products and increases auto premium pricing accuracy."

Progressive led the pack in terms of tapping into such opportunities, with rivals like Allstate, American Family, State Farm and Travelers now boasting such products, too.

Data sourced from Nielsen; additional content by Warc staff