The global UBI market was estimated at around US$24 billion in 2019 and is projected to reach $125.7 billion by 2027. Capgemini reported that with technological advances being fast-tracked due to the pandemic, it’s likely that interest in UBI will continue to grow.
UBI benefits both the insurer and customer; the insurer can use it to generate new revenue streams and the customer gains a sense of control over their insurance. UBI has been most commonly used for personal auto insurances, but Capgemini points out that there are more opportunities to expand its capabilities.
Seth Rachlin, Executive Vice-President at Capgemini, said: “The World Insurance Report 2020 shows a profound jump in the number of consumers who are interested in UBI, especially the pay-as-you-drive and pay-per-mile type solutions. To operate those programmes, insurers have got to be able to consume the right data to make those offers effective and to price them properly. The finding in our report about UBI before the Covid-19 pandemic, it’s prior to everybody having their car sitting in the garage for a few months.
“We’ve seen several carriers who have pay-as-you-drive, usage-based offerings experience a substantial increase in demand for those offerings as a consequence of the pandemic. I think that underscores the desire to have the insurance product more tailored to the use and the risk than the more traditional term-based coverages in the market today.”