By how much UBI use increased during the pandemic

Canadian drivers appear to be gravitating toward usage-based insurance (UBI) as the COVID-19 pandemic stretches past its second year.

Since 2019, there has been a 40% increase in the number of drivers opting into UBI when filing out a car insurance quote on the site, according to data from rate aggregator LowestRates.ca. The data insights are based on hundred of thousands of quotes received on the rate comparison site every year, LowestRates.ca tells Canadian Underwriter.

The Canadian P&C insurance industry has already seen UBI uptake soar as more carriers offer these telematics-based programs. And since the start of the pandemic in March 2020, there have been fewer drivers on the road and more drivers opting to take advantage of the cost-saving, pay-as-you-drive benefits of UBI.

Louis Marcotte, chief financial officer at Intact Financial Corporation, said last year during a virtual fireside chat that those driving less than they were before the pandemic were more likely to select UBI.

“The crisis has actually pushed consumers to look for products that mimic their driving habits – first on the number of miles, given the reduction [during] the [pandemic], and then quality of driving,” Marcotte says. “As people realize that that reduces the cost of insurance, we think the take-up will be greater.”

LowestRates.ca says interest in UBI in provinces where it is available increased between 2019 and the end of 2021, with a 40% increase in the overall percentage of drivers opting in to the UBI discount when filling out a car insurance quote on the site. Although the data includes the year before the pandemic, it does follow the trend in increased UBI uptake since the pandemic began.

“The popularity of UBI has been on a steady increase in the last few years in part due to more insurers offering the technology and increased awareness of how it works,” LowestRates.ca expert and licensed insurance broker Steven Harris says in a statement. “The pandemic really affected how much people were driving, so they started opting into technology options to help manage their premiums. Now that drivers are facing steep gas price increases as well, this remains one way they control their driving costs. More experienced drivers are opting in to UBI to take advantage of those savings.”

UBI involves the measuring of driving behaviour, such as total distance driven as well as sudden acceleration, hard braking, speed and time of day. Numerous insurers offer discounts based on safe driving behaviour; LowestRates.ca estimates low-risk drivers can save up to 30% on their premiums with UBI programs.

“But drivers should also be aware UBI data can increase premiums for higher-risk driving behaviour,” the rate aggregator cautions. “LowestRates.ca also estimates distracted driving can increase premiums from 4% to 24%.”

LowestRates.ca data show some interesting results. While all age groups showed an increased interest in UBI, it wasn’t the youngest, least experienced drivers who were most quickly adopting the technology.

“The highest growth was in those aged 40-49 (up 59% since 2019),” LowestRates.ca says. “Some UBI technology tracks when a handheld device is used by a driver. Drivers are less likely to be distracted by handheld devices as they age, and younger drivers are already statistically paying more for car insurance.”

Drivers aged 26-29, 30-39 and 50-59 showed an interest increased in UBI since 2019 at 50%, 49% and 48%, respectively. Those aged 60-69 and 70-79 showed the lowest interest, with an increase of 34% and 27%, respectively.

By province, the highest growth of drivers choosing UBI occurred in New Brunswick, with a 66% increase between 2019 and 2021, followed by Alberta with a 54% increase. Interest in UBI increased 36% in Quebec, 35% in Nova Scotia and 27% in Ontario.

 

Feature image by iStock.com/Circle Creative Studio