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Strategic Update of the European Usage-based Insurance Market for Passenger and Commercial Vehicles

  • June 2014
  • -
  • Frost & Sullivan
  • -
  • 86 pages


Table of Contents

UBI Will be the Biggest Benefactor of Big Data Analytics in Europe

The aim of this study is to research, analyze, and forecast the usage-based insurance (UBI) market for the European automotive industry. Currently, the specific focus is on understanding driving behavior and offers made by insurance companies. In some cases, a two-tier discount structure is present in which the first level is based on mileage and the second on static. In other cases, there is an analysis of real-time driving behavior. It also highlights the influence of big data on the UBI industry and offers a comparative analysis of key insurers both in the passenger and commercial vehicle space. Key strategic conclusions and recommendations have also been discussed.

Key Findings—Top 5 Market highlights

Smartphone Apps
-Though the hardwired type of UBI continues to dominate, smartphone solutions are likely to gain market acceptance in the coming years either as stand-alone solutions or by complementing the telematics box in the vehicle.
-Next-generation apps are likely to be 99% accurate compared to black boxes.

Solution Setup Based on Risk Profile of Drivers
-The black box is best suited for high-risk drivers, while a smartphone app and OBD II type of UBI solutions are likely to be better suited for low-risk and cost sensitive drivers.
-There is a high demand for smartphone-based solutions among young drivers (a potential high-risk age group), especially in the United Kingdom.

Impact of Regulations
-New legislation, such as eCall, Gender Ruling, the Monti law in Italy, and General Data Protection, are set to accelerate market momentum in the coming years, improving UBI activation. This especially applies to eCall, affecting countries like Germany and France.
-eCall will push all original equipment manufactures (OEMs) to offer UBI at the factory or dealer end, increasing UBI uptake.

Country-level Interest
-Most drivers in the key European countries have indicated they are willing to embrace UBI.
-The highest interest is seen in Italy and Spain.

Type of Data Key for Business Case
-“Driver behaviour” is a crucial attribute for UBI, especially for commercial fleets.
-Large data sets are available, presenting several opportunities for value creation.
-Big Data presents opportunities in predictive analytics across most business functions in the insurance industry, such as customers, claims, and fraud through social data mining.

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