The pandemic is changing consumers' driving habits in the long term, creating more low-mileage drivers and boosting usage-based policies' attractiveness.
The pandemic has created a new normal for workers in the UK, meaning consumers are driving less. Thirty-eight percent of UK employees worked exclusively from home during lockdown, while 8% more did so for at least some of the working week, per the press release. Additionally, many UK companies are continuing flexible work culture post-lockdown, which could mean that over 11 million workers in the country are able to work from home in the long term — creating a new work life normal.
Usage-based insurance is especially attractive for low-mileage users, and the new normal could give such policies a larger addressable market. By Miles' offering includes a fixed fee starting from £170 to protect cars against theft, accidental damage, and vandalism while parked, and then charges users as little as 3p for each mile they drive. So, its offering is especially attractive for consumers who don't drive a lot, which there will be more of moving forward.
By Miles has made a good start in the UBI space, and should now focus its efforts on using other alternative data to underwrite policies to better price risk and remain competitive. A number of other insurtechs and incumbent insurers are using mileage to price policies, while also taking driving behavior into account: Root collects data on acceleration and braking, among other factors, to accurately predict users' real risk, for example.
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