By the year 2020, over half of all auto policies may use UBI devices for premiums calculations.
The results of a research study performed by Strategy Meets Action has revealed predictions that by the year 2020, one fifth of all insurers will have usage based insurance products that will cover over half of the entire personal auto coverage market.
It indicated that there would be a very rapid growth in this sector of the industry.
The name of the SMA study was “Telematics/Usage Based Insurance: A Catalyst for Change”. The research contained in the paper showed that the general consensus is that this form of coverage will experience a very rapid growth over the next decade. However, the company also stated that “there is no unanimity of opinion as to how big a share of the market UBI will ultimately have, what it will look like, and what it will do to the traditional market”
It also stated that usage based insurance is one element of a broader vehicle telematics trend.
The research firm believes that this greater spectrum that includes usage based insurance will likely have an impact on the shape of other industries, in addition to this one.
SMA pointed out that the majority of the ten biggest private passenger auto insurers already have usage based insurance programs. However, they have yet to heavily promote them, and those programs are still available only in a handful of states. A number of them market this coverage only to certain segments of the marketplace, such as motorists with a good driving record or teen drivers. They have also been promoting it in conjunction with discounts for low mileage.
The company stated that “Outside of the largest companies in the auto insurance business, there is very little activity in the UBI space beyond some internal programs and pilots.” Among the exceptions to this statement is Progressive. That company has already installed more than a million usage based insurance devices and has collected the data that is associated with over 5 billion driven miles over a period of over the span of a decade.