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April 16, 2021

Usage-based insurance services begin to spread into commercial motor lines

By Patrick Brusnahan

Over the past decade, commercial motor insurers and fleet managers have been utilising telematics technology, with a heavy emphasis on improving risk management solutions and streamlining the claims process. However, following the outbreak of COVID-19, insurtechs have increasingly targeted the commercial motor insurance landscape, offering usage-based insurance (UBI) policies for fleets.

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Gain valuable insight on the Motor Insurance industry outlook for Asia Pacific

Asia-Pacific was the fastest-growing region globally during the review period (2016-2020), recording growth at a CAGR of 2.7%. China was the market leader, accounting for 52.9% of the region’s motor insurance premiums in 2020. To help you make the most of this significant growth, GlobalData’s has put together a comprehensive overview of the Asia Pacific motor insurance industry, including market sizing and forecasts. Read ‘Motor Insurance Industry Outlook in Asia Pacific’ for:
  • Analysis of leading insurers in the region
  • Details on regulatory requirements, including licensing rules, capital requirements, taxation regimes, and ownership quotas
  • Analysis of the impact of COVID-19 on the industry
  • Insight into key trends, technology developments, and potential disruptors in the motor insurance industry
  • Recent M&A activity in the motor insurance industry
Improve your business strategy with our extensive report. Download it for free, now.
by GlobalData
Enter your details here to receive your free Report.

According to GlobalData’s UK Top 20 General Insurance Competitor Analytics, RSA, Allianz, and Aviva made up over a third of the UK commercial market (36.3%) in 2019. Of the top three, RSA offers one of the most comprehensive fleet telematics offerings, having launched Smart Fleet in 2015.

However, up to Q2 2021, none of these leading insurers have created commercial motor insurance products that financially reward businesses for ‘good’ driving habits or went so far as to give businesses discounts based on how their fleets are used. In contrast, commercial motor premiums have been heavily characterized by a flat annual fee.

Before the outbreak of the virus, Zego and Cuvva were the only two providers in the UK with a focus on short-term commercial motor insurance coverage. These products were targeting gig workers or short-term vehicle rentals.

However, the virus has impacted businesses and their supply chains differently. Some businesses experienced an increase in demand for goods and services, while others experienced a temporary decline in commercial vehicle usage. The impact of the pandemic ultimately created a demand in the market for flexible commercial insurance services.

Additionally, with the virus creating further economic implications, there has been an increased need for businesses to save money.

In May 2020, insurtech Zego launched UBI coverage for fleets ranging in sizes of 20–200 vehicles. Fellow insurtech Flock, a commercial drone insurance specialist, followed Zego’s move and launched connected commercial fleet insurance in November 2020. Both Zego’s and Flock’s products have been well received in the market throughout 2021. Zego became the UK’s first unicorn insurtech, while Flock’s connected insurance was selected by luxury vehicle renter the Out as its designated insurance partner.

The trend of UBI products in commercial lines is also spreading outside of the UK. In April 2021, US insurer Farmers launched a new UBI commercial motor insurance programme called FairMile.

Incumbent commercial motor insurers will need to catch up with the rapidly changing market trend, especially as insurtechs challenge the market space with and without usage-based. The shift in the market means that telematics will no longer be viewed as a tool for businesses and insurers to mitigate their risk but rather as a tool that will also influence premiums prices. Insurers who don’t integrate these services risk falling behind on two fronts: firstly, on attracting clients, and secondly, in being able to capitalise on driving behaviour data, which is becoming increasingly valuable for learning how to price premiums.

Free Report
img

Gain valuable insight on the Motor Insurance industry outlook for Asia Pacific

Asia-Pacific was the fastest-growing region globally during the review period (2016-2020), recording growth at a CAGR of 2.7%. China was the market leader, accounting for 52.9% of the region’s motor insurance premiums in 2020. To help you make the most of this significant growth, GlobalData’s has put together a comprehensive overview of the Asia Pacific motor insurance industry, including market sizing and forecasts. Read ‘Motor Insurance Industry Outlook in Asia Pacific’ for:
  • Analysis of leading insurers in the region
  • Details on regulatory requirements, including licensing rules, capital requirements, taxation regimes, and ownership quotas
  • Analysis of the impact of COVID-19 on the industry
  • Insight into key trends, technology developments, and potential disruptors in the motor insurance industry
  • Recent M&A activity in the motor insurance industry
Improve your business strategy with our extensive report. Download it for free, now.
by GlobalData
Enter your details here to receive your free Report.

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