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6 July 2020
Usage-based insurance (UBI) has been given a popularity bump by the COVID-19 pandemic as social distancing and lockdowns see car owners drive much less.
UBI premiums are calculated depending on the use of the insured asset.
“As a result of COVID-19, customers will appreciate UBI’s value proposition more, as they will feel unfairly treated by paying to protect an asset they barely used during the past few months,” analytics firm GlobalData says.
A UK survey by GlobalData last year found 9.7% of drivers had a UBI policy and the company expects this figure to increase as a result of COVID-19.
UBI policies are more popular among younger drivers, with uptake just 2% among those aged 50–54.
UK insurer and UBI provider By Miles recently raised £15 million ($27.06 million) in funding and had its strongest week ever in April. Pay-per-mile motor insurer Just Auto Insurance recently launched in the US.
GlobalData says the ongoing interest in UBI will spur more cover of this nature to be developed.
“While these policies are mostly focused on motor insurance, more lines of business will begin to experiment with the model as well.”