Research Shows Potential Growth in Usage-Based Insurance for Fleets

More than half of small fleet managers are likely to stay with their current insurance carriers rather than switching if their insurer offers usage-based insurance (UBI) programs, according to a recent report.

By way of background, Usage Based Insurance (UBI) is an insurance program that allows fleets to share information about when, how much, and how the vehicles within a fleet are driven. This information is automatically collected and stored and is available for an insurance company to review to determine if discounts are attainable.

The study also found that 25 percent of commercial fleet managers of all sizes would enroll in UBI, but current usage rates are only at six percent.

“There is a significant gap between the estimated demand for commercial UBI and current enrollment rates,” said Deke Phillips, Director, Commercial Insurance, LexisNexis Risk Solutions, which conducted the study. “This indicates a substantial market opportunity for insurance carriers to raise awareness and eventually adoption, especially with small fleets of two-to-five vehicles.”

Specific findings showcasing strong opportunity for insurers to target small businesses and their small fleets include:

• Estimated demand for commercial UBI among 2-5 vehicle fleets is at 24 percent
• Estimated demand in small fleet commercial UBI is 10 percent greater than that of consumer demand, consistent with last year’s findings.
• UBI also has the potential to be a strong retention and acquisition tool for commercial insurance carriers according to the findings. 60 percent of small fleet managers said they would be less likely to switch insurance providers if offered UBI with a 10 percent discount.

Category: Featured, General Update, Management