58% of U.S. fleet survey respondents would switch carriers if they were offered a “fully loaded” UBI package: LexisNexis study

More than half of small U.S. commercial fleet managers are likely to stay with their current insurance carriers rather than switching if their insurer offers usage-based insurance (UBI) programs, according to a LexisNexis white paper released on Tuesday.

The 2015 LexisNexis Commercial Usage-Based Insurance Study found that 58% of respondents would switch insurance carriers if they were offered a “fully loaded” UBI package, consisting of a 10% premium discount, fleet management services and the technology of their choice. The annual study from the company, 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%. [click image below to enlarge]

“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, in a press release. “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.”

Regina Haas, director of media and analyst relations with LexisNexis Risk Solutions told Canadian Underwriter that 455 fleet managers/policy decision-makers in the United States were surveyed. The blind, web-based survey consisted of managers of fleets comprising two to 20 vehicles that are owned or leased by the business and were policy-decision makers covered by a commercial auto insurance policy.

According to LexisNexis, specific findings showcase a strong opportunity for insurers to target small businesses and their small fleets, defined as “commercial auto fleets comprising fewer than 20 vehicles.” These findings include:

• 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, according to the findings. Sixty percent of small fleet managers said they would be less likely to switch insurance providers if offered UBI with a 10% discount. [click image below to enlarge]

“New marketing tactics are needed to grow awareness of commercial UBI for fleets of 20 vehicles or fewer,” the white paper suggested. “For example, one in four respondents said they were not aware of a commercial UBI program, and more troubling, over half said they were not sure if a commercial UBI program was available. The low awareness of fleet management services among smaller fleet managers suggests that education and proper positioning of fleet management benefits will be required before smaller fleet managers see the value of such services – and accordingly, before they perceive fleet management services as a value-add to commercial UBI.”

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. Employee barriers related to the cost and data usage of using their personal smartphones for UBI is relatively small.

“For commercial auto carriers, UBI has potential to improve segmentation, enhance risk management and enable more accurate risk pricing,” the report concluded. “Our study of commercial UBI shows that there is still a significant opportunity for UBI in small fleets, with estimated demand for small fleet UBI significantly exceeding current enrollment rates.”

The report said that successful carriers will be able to couple a commercial UBI program with smart, targeted marketing that addresses the varying needs of smaller, mid-sized and larger fleet managers. “Carriers that do not take advantage of today’s UBI opportunities may soon find themselves at risk of attrition and adverse selection.”