More than half of small fleet managers (two-to-five vehicle fleets) are likely to stay with their current insurance carriers rather than switch if their insurer offers usage-based insurance (UBI) programs, according to the 2015 LexisNexis Commercial Usage-Based Insurance Study.
This annual study conducted by LexisNexis Risk Solutions, a provider of data, analytics and technology, also found that 25% of commercial fleet managers of all sizes would enroll in UBI, but current usage rates are only at 6%. Respondents were managers of fleets comprising two to 20 vehicles that are owned or leased by the business.
“There is a significant gap between the estimated demand for commercial UBI and current enrollment rates,” said Deke Phillips, director, commercial insurance, LexisNexis Risk Solutions. “This indicates a substantial market opportunity for insurance carriers to raise awareness and eventually adoption, especially with small fleets of two-to-five vehicles.”
“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,” added Phillips.
Here are some findings that demonstrate a strong opportunity for insurers to target small businesses and their small fleets:
- Estimated demand for commercial UBI among two to five vehicle fleets 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: 60% of small fleet managers said they would be less likely to switch insurance providers if offered UBI with a 10% discount.
In fact, if an alternate carrier offered a fully loaded UBI package — which included insurance at a 10% discount and fleet management services — provided through a fleet manager’s preferred technology, more than half of the respondents would be likely to switch carriers, according to the study.
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.
In addition, the 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.