Majority of Canadians showing interest in usage-based auto insurance

Canadian drivers are receptive to purchasing usage-based auto insurance policies, fairly in line with other global markets, according to a new survey from professional services firm Towers Watson.

More than half (56%) of drivers here said they have a “strong interest” in purchasing a UBI policy, according to the research. A majority (85%) also said they would be open to such a program, with 94% expressing interest if they were guaranteed their premiums wouldn’t rise.

Indeed, the primary concern with UBI revolved around the possibility that premiums might increase (47% of respondents), although privacy issues such as sharing of consumer data (46%) and apprehensions around using data to invalidate claims (46%) were also concerns, based on the survey.

“The Canadian UBI market has quickly developed into a rapidly changing landscape,” Robin Harbage, global lead for Towers Watson’s UBI practice and DriveAbility service offering commented in a press release.

“Until recently, UBI in Canada was limited to just a few programs, but over the past year new entrants have entered the marketplace and increased the range of products available,” he added.

Almost half (48%) of respondents indicated they would be willing to change their driving behaviour if using UBI technology, including by sticking to the speed limit (65%), keeping a safe distance from other vehicles (45%) and driving more considerately (45%).

In terms of value-added services, 65% said they would be willing to pay for them, with vehicle theft tracking proving most interesting (with 86% expressing interest). Automated emergency calling (85%) and vehicle wellness reports (79%) were also among the services considered most appealing.

Drivers said they would be willing to pay for these services, with 56% prepared to pay between $3.75 and $7.50 a month, according to the survey.

“Canadian drivers’ indication that they acknowledge the usefulness in purchasing UBI-related, value-added services is an important signal to insurers,” Harbage said.

“These services can help insurers differentiate and de-commoditize their products. They can also help them focus on a brand-new consumer base to grow new business and improve retention.”