- Young drivers using UBI continue to drive safer, resulting in fewer accidents and fatalities
- Cost-of-living crisis now fuelling increased telematics demand with significant reduction in privacy risk concerns in favour of decreased premiums
- UBI market share trending well above pre-pandemic levels
IMS (Insurance & Mobility Solutions), the leading global vehicle and driving data business, has updated the ground-breaking 2018 LexisNexis Risk Solutions report that evidenced the road safety benefits of UBI (usage-based insurance) telematics technology among young drivers in the UK. IMS has used updated accident information and extensive in-market telematics data and experience to derive the latest view, which now also factors in both the COVID pandemic and inflationary timelines.
The research shows that between 2018-2022 (see Figure below), young driver casualties continued to trend downwards with a direct correlation to increased telematics adoption. After a brief hiatus during 2020 COVID lockdowns due to postponed driving tests, UK adoption of UBI has increased substantially with increased demand now also driven by inflationary pressures, with the desire for consumers of all ages to reduce their cost-of-living.
IMS’s five-year data view, which includes 2020-2021, showcases that the number of 17–19-year-old drivers who have been killed or seriously injured in road traffic accidents (RTAs) fell from 10,508 in 2018 to 6575 in 2021 – a further 37% drop in three years, compared to a 1% increase in numbers killed or seriously injured among the car driving population as a whole.
That fall in young driver injuries compares to a 39% reduction in the seven years between 2011-2018, and also takes account of new perils that have emerged, in particular distracted driving, mostly caused by mobile phone use.
Nearly 420,000 driving tests were conducted in the last quarter of 2021, back to pre-2020 levels. With a near 50% pass rate, around 200,000 new drivers entered the market during the latter part of last year alone – with an increasing percentage looking to UBI to counter soaring motor premiums. Of note, a typical UBI premium for a 17–20-year-old driver in the UK is around 40% cheaper (source: Adrian Flux) than a traditional policy. The cost-of-living crisis is acting as a major catalyst to UBI take up, especially among drivers where vehicles are essential to their jobs.
Telematics adoption is also showing signs of increased demand within the mass market. Claims inflation is feeding through to higher motor insurance premiums, causing more experienced drivers to adopt UBI to make their insurance more affordable.
IMS has modelled increased adoption of UBI in the UK from 1.39m in 2019, to 1.66m in 2022. Adoption dropped by 19% during the pandemic, from 1.39m to 1.12m, but is now 19.4% higher than pre-pandemic levels, and 48% higher than the height of the pandemic in 2020.
Assuming a similar compound rate of growth in the UK identified by the Research and Markets report, we could see around 2.225m UBI policies being sold in the UK by the end of 2025, a near 70% increase on the size of the market today.
In light of these new figures, and the overwhelming benefit of telematics to young drivers and the greater society, IMS urges the government to look at ways to help foster even further adoption of the technology. A popular consideration continues to be removing some or all of the insurance premium tax on telematics-based products. Insurance premium tax adds 12% to motor insurance premiums, which equates to over £120 (source: This is Money) for an average UBI policy.
A collective effort, with help from government could see UBI market share in the UK grow from 3-5% currently to 10% during the next three – five years. That equates to a lot more people driving safely on our roads.