Is usage-based insurance the future?

In today’s digital world, offering customers completely customised solutions is easy. From custom-made helmets to personalised clothes, businesses must go the extra mile to stand out from the competition. The customisation hyper-trend empowers customers to find solutions for their specific needs. In the insurance market, Usage-Based Insurance (UBI) offers customised plans based on the policyholder’s unique needs and behaviour. Although already established globally and in India, Zuno has made UBI readily available in India.

Given the changing market, offering only regular motor insurance plans seemed counter-intuitive. Policyholders paid the same premium, regardless of whether they used their car every day or only once a fortnight. The way people use their vehicles has evolved, and the insurance market had to adapt to fulfil these changing needs.

After launching SWITCH, we wanted to explore how customers reacted to UBI products in the market. To that end, we conducted in-depth research on customer perception and what could impact their decision while choosing between regular and UBI offerings.

Since our UBI product uses driving behaviour to provide customised solutions, we wanted to understand what people believe constitutes safe driving. Not driving under the influence and wearing seatbelts were the two top concerns.

Yes – at least according to research. Our study showed that 97% of women and 88% of men want to know their driving scores. In fact, 76% said the driving score could help them improve their driving skills!

Despite the benefits of usage-based insurance, awareness remains low in India. Only 58% of respondents knew about usage-based car insurance, with only 49% aware of the benefits. So, we explained. We gave respondents time to view a product concept card to see how it would impact their decision-making in the future.

An overwhelming 95% of respondents said the driving score and rewards for safe driving could influence people to drive better and follow more rules.

The research shows that millennials and Gen Z drivers are happy to embrace customised solutions that reward good driving behaviour. Although market awareness is still lower than we’d like, policyholders are open to learning about UBI products and experimenting with them to enjoy the benefits. Zuno popularised UBI insurance in India with SWITCH. As our customers continue to evolve, we look forward to developing other UBI products that help meet growing and changing needs.

ARN: Zuno/Blog/0323/10