UBI uptake expected to explode
Last year nearly 12 million consumers took out usage-based auto insurance (UBI) – but if that sounds like a lot wait until you see the projected figure for 2023.
According to a new report from IHS Automotive, UBI could attract up to 142 million subscribers globally within the next seven years, driven by a technical revolution.
This type of automobile insurance uses real-time information about a driver’s actual driving ability and habits to assess risk, capturing information from the in-vehicle telematics system. It’s been around for a decade, but has been slow to take off partly because of market stagnation and the reluctance of insurers to embrace the solution.
However, IHS Automotive expect that to change. Stacey Oh, manager, automotive technology at IHS Automotive, said, ‘The current UBI landscape is in transition with robust expansion. New insurers are entering the market, new markets are being opened and new solutions are being launched.’
Italy is the only country in which UBI has a double digit share of the insurance market at present, with 10 per cent. The UK also has a mature UBI market, and activity is growing in France, Germany and Spain, although still niche.
However, the major growth is expected in the US in the coming year. America is the largest car insurance market in the world with more than 260 million vehicles in operation in 2015, five million of which held UBI policies last year.
Another key market to watch is China, with 15 insurance carriers due to launch UBI pilots this year. The sheer size of the automotive market allows for the UBI subscriber volumes to grow from 50,000 in 2015 to over 22 million by 2023, according to IHS Automotive forecasts.