The Future of Insurance: Usage-based Insurance and Autonomous Vehicles

Technology is rapidly changing the fleet industry. Telematics and GPS solutions are altering how fleets monitor their assets. Autonomous vehicles, though still in the initial stages, are flipping the auto industry on its head. With the rise of these groundbreaking technologies, fleets are also changing how they use insurance to protect their assets.

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Usage-based insurance

Telematics has led to the development of usage-based insurance (UBI). This insurance structure bases premiums on driver safety scores, monitored via OBDs or smartphones. The telematic system tracks fleet driver trips and assigns scores based on the number of risky driving behaviors, usually defined as speeding, hard braking and fast acceleration. Fleets with safe drivers are then rewarded with lower insurance premiums.

Some insurance policies offer savings up to 40 percent if fleet safety scores reach a certain threshold. The savings can add up. In 2011, one ambulatory fleet estimated saving $20,000 - $30,000 on their UBI insurance policy.

The UBI market is growing each year. Between 2015 to 2016, the market grew by 32 percent. As of 2016, North America is the largest market with 7.1 million policies followed by Europe with 6.5 million policies.

Driving behavior is the most predictive risk factor for a driver—200 percent more predictive than fleet insurance claim costs. So, this insurance structure is almost a no-brainer since it’s effective in identifying less risky insurees and leads to fleet savings.

The typical insurance structure benefits larger fleets since the fleets can leverage their size and tendency for lower risk. UBI helps smaller fleets gain more control of insurance costs and maximize their bottom line, however, since the emphasis is placed on driving behavior.

Over the next few years, both fleets and consumers will increasingly take advantage of UBI policies. About 70 percent of all auto insurance providers are expected to pair UBI policies with telematics solutions by 2020. More fleets will be rewarded for their safe drivers with savings on insurance premiums.

With the adoption of self-driving vehicles, usage-based insurance and telematics are expected to have continued growth as well.

Autonomous vehicles

The insurance landscape will continue to morph as autonomous vehicles increasingly enter the market.

As vehicle control shifts to the vehicle themselves, accident liability is expected to fall to manufacturers and tech companies. As a result, premiums are predicted to fall by 75 percent or more.

There likely will be a shift to more driver-centric policies and usage-based insurance policies. Large fleets may even choose to insure themselves and individuals may choose to not have auto insurance at all, relying on health insurance instead.


Over the next few decades, the auto insurance industry will undergo developments. There’s going to be an increasing shift towards usage-based plan structures and emphasis on insuring manufacturing and tech companies instead of drivers.


Jessie Robinson

Content Marketing Specialist

Jessie Robinson is a Content Marketing Specialist at Fleetio, and is passionate about the future of green transportation technology. Jessie studied at UNC Chapel Hill and is a die-hard Tar Heel basketball fan.

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