A new study conducted by LexisNexis Risk Solutions finds that telematics-driven usage-based insurance (UBI) programs could not only help small fleets achieve discounts but also help insurers retain and win more business from the fleet market overall.
The 2015 LexisNexis Commercial Usage-Based Insurance Study, an annual web-based poll of fleets largely comprised of two to 20 vehicles, also found 25% of commercial fleet managers of all sizes are interested in enrolling in UBI programs, but current usage rates are only at 6%.
“There is a significant gap between the estimated demand for commercial UBI and current enrollment rates,” noted Deke Phillips, director of commercial insurance for LexisNexis Risk.
“This indicates a substantial market opportunity for insurance carriers to raise awareness and eventually adoption, especially with small fleets of two to five vehicles,” he explained. “More insight into the driving behavior of commercial drivers will benefit insurers by knowing the risks on the road, and driver feedback methods have the potential to improve driving and positively impact everyone on the road.”
Phillips told Fleet Owner via email that UBI is an insurance program that allows fleets to share information about when, how much, and how the vehicles are driven. This information is automatically collected and stored and is available for your insurance company to review in order to determine if a fleet is eligible for premium discounts, he said
Other UBI-related findings from this annual LexisNexis poll include:
- Estimated demand for commercial UBI among fleets with two to four vehicles is at 24%;
- Estimated demand in small fleet commercial UBI is 10% 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 as 60% of small fleet managers said they would be less likely to switch insurance providers if offered UBI with a 10% discount.
That being said, if another insurance provider carrier offered a fully loaded UBI package that included insurance at a 10% discount and fleet management services provided through a fleet manager’s preferred technology, more than half of the respondents said they would likely switch insurers.
Phillips added that, similar to the 2014 LexisNexis Insurance Telematics Study results, small fleet managers find benefits in value-added services, but these services are not a significant driver in adoption of commercial UBI programs.
The LexisNexis study also found that smartphones, which present a low cost entry to adopting an UBI program, are appealing since most costs are paid for by employers, while employee barriers related to data cost and usage related to their personal smartphones is relatively small.