Both the pandemic and cost-of-living crisis have triggered a shift in consumers’ needs for car cover, say expert panel

Usage-based motor insurance policies are quickly becoming a “savvy life-hack” for consumers seeking to ease financial struggles caused by the cost-of-living crisis, according to By Miles chief commercial officer Maddy Howlett.

Speaking at the Insurance Times BrokerFest last week (16 June 2022), Howlett explained that By Miles had seen a “really big shift in terms of consumers’ behaviour” in the motor market.

The change boils down to a “significant amount of people” switching from an annual car insurance policy to usage-based cover, with customers “realising they can save, in some cases, [up to] £300 off their standard insurance”.

A decrease in commuting spurred on by the pandemic – with many people now working from home – has also played a part in the increased popularity of usage-based policies.

Considering consumers’ changing motor behaviour, Howlett said: “We are at an interesting point, where lots of different things are coming together and we are seeing customer appetite really open for something that’s very different that much better reflects how they want to live their lives and control their costs.”

‘Getting under the skin’

Howlett stated that usage-based insurance policies can aid consumers’ transition to net zero and are most popular among those aged under-35 due to the “flexibility” of the cover.

“We need to be giving people reasons why it’s a good thing not to drive so much. Having that usage-based approach and the links to EVs and other types of transport that people may use really fits in with that attitude,” she said.

Partners& client partner and head of automotive Leon Bosch, echoed Howlett’s sentiments and added that motor insurance is becoming ”even more short-term and on-demand”.

“Because of the demand of by-mile or by-the-day, we’re seeing a lot of enquiries from businesses looking to start up in this space, whether that’s established dealers or manufacturers looking to generate their own subscription service or disruptors that want to be early adopters,” he said.

Bosch further highlighted that the firm was seeing “a lot more enquiries” from people who want access to motor insurance like the subscription services of Netflix and Spotify, which leaves a gap for firms to create new products.

In view of addressing new risks, like the usage-based policies, Bosch said “it’s a case of really getting under the skin of it and trying to find a solution that can not only cater for the traditional risks that are still there, but also the new emerging risks which come with innovation”.