UBI – the post COVID car insurance solution
The COVID-19 pandemic impact has been well documented and like many other industries the insurance sector needs to adapt quickly to the impact of the virus and how it is going to change people’s behaviour in this time of uncertainty. Car insurance firms are seeing a change in driving trends and a huge shift in customer expectations.
Currently with the vast majority of people working from home the average mileage amount being driven has decreased, but as we start returning to workplaces and offices commuting by car is expected to rise as employees will aim to avoid crowded public transport.
In the UK many drivers received refunds on their insurance as they drove less in lockdown, but this didn’t stop a huge increase in people shopping around. Customers that are driving less feel they are being treated unfairly with the majority seeing no change to their monthly premiums. For insurance companies the additional, and very real risk, is that a large majority will leave and seek a fairer insurance solution from another provider. Factor that in with a customer’s expectation that large organisations should be offering a solution to help during a crisis, and we have the potential for significant impact to businesses.
Most UK drivers feel that their driving habits will change post COVID-19 in some significant way and many drivers are seeking policies that reflect this new normal. This has seen a surge in drivers being interested in the transparency, cost savings, and flexibility that telematics provides, like the Usage Based Insurance telematics program Pay as You Drive (PAYD).
PAYD is a proven telematics insurance productthat benefits customers who use their vehicles less frequently or don’t drive far with a lower monthly premium. This used to be a small minority of drivers but due to the pandemic this is rapidly shifting and could end up being the majority of drivers in the near future. Telematics data gives insurance companies a clear record of driving time and data so they can manage the policies simply and reduce risk. This data can be used to help individuals who want a reduction, but still need some level of car insurance, and more importantly the opportunity for insurers to capture new customers from competitors who aren’t offering these solutions.
PAYD is a solution that solves two problems in car insurance: the insurers have the data and information to manage the risk and therefore satisfy drivers who match this risk criteria and desire lower insurance premiums.