Market Trends of Global Motor Insurance Industry
This section covers the major market trends shaping the Motor Insurance Market according to our research experts:
Usage-based Insurance and Insurance Telematics in Motor Insurance is on Rise
Usage-based insurance (UBI), which is also referred to as pay-per-mile, pay-as-you-drive, or pay-as-you-go, is a type of auto insurance, in which the insurer can measure how far a vehicle is driven, where it's driven, and how it's driven. UBI is generally powered by telematics technology that is pre-installed in a vehicle's network or can be used through a plug-in device/mobile application. Telematics devices provide the insurers with a wide range of data, such as braking and accelerating, to measure the drivers' behavior and usage of the vehicle. Based on the collected data, the insurers calculate the insurance premium for that particular policy. The Covid-19 crisis emphasizes the need for UBIs. Although a lockdown being the rarest of the rare scenario, it had got the consumers into thinking about differential pricing. Being charged for what one uses is the new trend. The new trends are pay as you drive (PAYD) or pay how you drive (PHYD).
According to the National Association of Insurance Commissioners (NAIC), approximately 20% of all auto insurers in the United States may offer usage-based insurance within the next five years. The usage-based insurance is gaining traction in the market, as it is a win-win for both, the policyholder and the insurance company. It provides an incentive for the driver to adopt safer driving practices that can lower the number of accidents and the number of claims for the insurance company, and the benefit for the policyholder is that as the safety level of the driving increases the premium reduces. Black box insurance, also known as telematics insurance, is an auto insurance program that offers premiums based on current driving behavior as opposed to historical performance. Black box insurance aims to match motorists with personalized premiums according to their driving performance.
Online Channel Is The Most Preferred Channel To Buy Motor Insurance In Developed Economy.
In the developed economies like United Kingdom, US, Japan, Germany, Australia etc. most people prefer to buy motor insurance online than by phone or in person. With the maximum internet penetration rate and development of online technology the online sales of motor insurance is more popular in those developed economy. According to the survey done by Deloitte, UK customer are most strongly in favor of the online channel for the motor insurance. In UK 81% of the respondent preferred the online channel to buy the motor insurance, followed by Australia where 60% of respondent preferred online channel and In Japan by 53% of respondent.
