Usage-based insurance is striking a chord among consumers who believe they are paying more than they should. Could telematics be the beginning of the end of underwriting that uses broad demographics to group customers together under the assumption that they represent similar risks and should pay similar premiums?
One UK online carrier allows customers to buy miles of coverage in advance. An onboard device then monitors the customers’ car usage, and the drivers top up their insurance when their miles run low. They are even rewarded with bonus miles for safe driving. Clearly, this is a concept that customers are attracted to. According to our research, more than three-quarters of auto insurance customers surveyed are interested in premiums that fluctuate based on how much or how little they use their cars.
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