UK automobile club AA offers UBI with the help of a so-called Drivesafe box in the car (Photo: AA)
User-based insurance (UBI)Â is set to continue its strong growth and is on its way to become an essential part of the insurance industry's offerings, according to a new report published by market researchers Aite Group. This will provide opportunities for specialist providers that can help the insurance industry build suitable products.
"The combination of broader consumer acceptance, more ubiquitous technology, and carriers' recognition that they need not implement this technology themselves has created a groundswell of UBI offerings by third-party solution providers,” said Jamie Bisker, senior analyst in the property and casualty insurance division of Aite Group.Â Aite said there are more than 200 specialized vendors in the UBI or telematics space that cater to the insurance industry.
In Europe and North America, awareness of UBI tripled between 2010 and 2013, the researchers said. In the UK alone, telematics based car insurance sales rose by more than 60 pc since June 2012.
For its report, titled "Telematics and Usage-Based Insurance: Notable Players in an Evolving Market," Aite gathered information from six providers of insurance telematics or UBI solutions. Based on its findings, the Boston-based research company cited broad uptake and use of connected smart devices and apps that make interactive data communications possible.
"Although UBI will not overtake all other forms of insurance, it will be firmly ensconced in many carriers' product and services tool kits," the report said.
In Europe, UK insurers are taking the lead when it comes to offering UBI to car drivers. The AA automobile club, for example, offers a "Pay how you drive" insurance package that gives an upfront discount on the premium paid. A telematics Drivesafe box is fitted to the car and, if a driver's record during the year is good, he may receive money back from the company.
Separately, location services provider TomTom announced in June that Allianz France would use the Dutch company's Link 100 telematics platform to let French consumers assess their driving with the help ofÂ a smartphone app. TomTom's platform plugs directly into a vehicle's diagnostics port.
-By Arjen Bongard