UBI Opportunity is Knocking
How big is the usage-based auto insurance market?
Nobody's certain how large the present market is for usage-based auto insurance, but all the indications are strong that the market is moving past emerging into arrived. Insurance companies are making large financial bets, and are bullish that this new market segment will produce profitable growth.
Sun Coast General Insurance is one of those bullish on the usage-based auto insurance market. Since our launch of DriveSure in mid-2013 Sun Coast has been offering our usage-based auto insurance product in Arizona, Oregon, and Utah. We are confident that that consumers are seeing beyond the savings opportunity, and they have recognized value-add components presented by DriveSure and other usage-based auto insurance products.
But still, what is the current market opportunity for usage-based auto insurance? There have been several surveys conducted, ranging from 42% all the way to 79%. Recently, a survey conducted by Deloitte concluded that at least half of all consumers are willing buyers of the usage-based auto insurance concept.
In fact, Deloitte broke the survey into three segments:
- “Eager Beavers” which were 25% of those surveyed who would be willing to try a usage-based auto insurance product without even getting a discount.
- “Fence-Sitters” who are those who remain more skeptical and would require some form of discount to get them to act – they were also 25%.
- “Naysayers” these were the reluctant holdouts who wouldn’t allow insurers to monitor their driving under any circumstance.
For the most part, regardless of the survey you read, the “Eager Beavers” or “Fence-Sitters” are always early lifecycle shoppers. What was interesting in this most recent survey was the finding that income and gender didn’t significantly alter acceptance.
Therefore, if we are to believe this survey, where 50% of the market is either an “Eager Beaver” or a “Fence-Sitter,” the prospects are good for the usage-based auto insurance market. We are all still very early in developing products to meet or create new demand for this emerging segment. And if 50% of the market is there with nary a nudge, then the prospects are high when the technology and delivery begin to mature.