The advantages of Usage-Based Insurance (UBI) for companies and their drivers

7 min readMar 14, 2022


With the rapid growth in recent years of the telematics technology which enables usage-based insurance and incentivized driving packages, increasing numbers of individual vehicle owners, fleet-owning businesses, and SMEs are considering switching their traditional insurance products to PAYD (pay-as-you-drive) insurance. This is in large part due to the host of benefits a more accurate picture of driving habits can bring about, from lower costs, to more personalised products and an overall better driving and consumer experience.

For those still on the fence about usage-based insurance and its benefits to drivers, small businesses, and other road users, in this article we’ll be outlining the major advantages business consumers can expect when choosing UBI over more traditional insurance packages.

In this article, we’ll be covering:

  • What is UBI?
  • How does UBI work?
  • A look at the current state of UBI — where is the industry at right now
  • The Future of UBI
  • What are the benefits to small companies of UBI?
  • Why UBI insurance companies should work with Concar

What is UBI?

Usage-based insurance– otherwise known as behaviour-based insurance or pay-as-you-drive (PAYD) — is a personalised car insurance whereby rates are calculated based on individual driving behaviour.

A car insurer tracks specific data points such as speed, harsh braking, and mileage to assess a driver’s capability and attitude to risk, with points allocated for each. When combined, these points provide a driver with an overall score which is used to determine their personalised car insurance rate. In some cases, car insurance companies will also provide advice on how a driver might improve their score, based on the data that’s been collected, in order to help them bring down their premiums.

How does UBI work?

While traditional usage-based insurance was reliant upon manual reporting from drivers and was limited to tracking the distance driven in the vehicle, advances in telematics technology have enabled the transmission of numerous other data types, such as travel routes, driving behaviours, customer habits, and personal preferences.

Using an OBD-dongle, insurers can collect driving behaviour and vehicle data for:

  • Speed
  • Acceleration
  • Hard braking
  • Hard cornering
  • Miles driven
  • Time of day
  • Phone use while driving

Thanks to these data points, an insurer can price products depending on how, when and where customers drive which in turn facilitates the calculation of a customer’s premium much more efficiently. In addition, with the collected data, vehicle insurers can gain valuable insights into accident estimation.

A look at the current state of UBI

Trends surrounding UBI are about to come to a head, with an estimated 140 million UBI subscribers expected around the world by the first quarter of 2023. Interest from large insurers is also booming, with 74% planning or expressing interest in telematics programs. Market analysts predict that the global telematics market will be worth $100 billion this year alone.

What’s clear is that individual drivers, large organizations and SMEs want a new and better experience from their car insurance providers and are demanding personalised options which meet their usage, behaviour, budget and needs. With a UBI solution, companies which manage fleets of vehicles and individual drivers can:

  • Remove the uncertainty of large premiums
  • Enjoy a larger range of products and packages
  • Exercise control over their rate through better driving behaviour
  • Enjoy a more responsive relationship with their insurer

The Future of UBI

Looking ahead, usage-based insurance looks set to reach even more markets and audiences, with expected client bases widening to include experienced, senior and high-end vehicle drivers in addition to younger generations and digital natives. As government regulations adapt to demand and technological advances, it’s estimated that the automotive telematics market will grow at a CAGR of 23–24 % over the next few years.

What are the benefits to small companies of UBI?

For small companies with under ten vehicles, usage-based insurance can be a game changer in terms of reducing costs, boosting brand reputation, and improving driving behaviours. Let’s take a look at why small companies should consider UBI for their cars and drivers.

Reduced insurance costs

Perhaps the most obvious benefit of usage-based insurance is that insurance premiums can be significantly reduced for low-risk drivers and companies who employ low-risk drivers. Companies can gamify this experience, offering their own benefits or prizes to individual drivers who operate their vehicles with caution. For the companies themselves, there are other discounts to be had. Numerous insurance companies offer large “welcome” discounts to small businesses which sign up to UBI to further incentivize the adoption of this technology.

Improved driving behaviours

A company whose drivers’ behaviour is monitored and scored through the adoption of tracking technology enables the company to reward responsible driving and de-incentivize bad driving, boosting driving performance and safety across the board. As high-risk drivers lead to larger insurance premiums for the company as a whole, a company is also incentivized to only employ the most responsible drivers.

Boost to company reputation

A direct benefit to a vehicle-owning business of improved driving behaviours is the boost to company reputation. Irresponsible or reckless driving behaviour reflects badly on the business and can impact on whether a customer uses its service or the service of a competitor. When financial incentives to drive well are passed on to individual drivers, a business can rest assured that the employees operating their vehicles aren’t risking the brand’s reputation with unsafe or poor driving.

Increased driver, passenger, and pedestrian safety

When a driver’s behaviour is closely monitored and scored based on how safely they drive, the safety of that individual and all other road users and pedestrians increases. With higher-risk motorists paying higher per-mile fees, this group in particular has even more reason to reduce their time on the road or alter their driving style significantly enough to impact their insurance premium. When higher-risk drivers are de-incentivized to drive (due to high per-mile premiums) we are likely to see a stark reduction in traffic accidents, injury, and death, in addition to reduced traffic congestion and urban sprawl.

Reduced fuel, parking, and road costs

Unnecessary driving is significantly reduced when a driver’s insurance rate is directly related to their driving experience. In fact, the implementation of UBI is expected to reduce vehicle travel as a whole by more than 10%, reducing energy consumption, and road and parking facility costs. When less fuel is used due to more efficient driving and vehicles spending less time on the road, a company’s overall fuel and maintenance costs also come down.

Why UBI insurance companies should work with Concar

For UBI insurance companies which require access to car data in order to offer their B2B customers personalised and highly accurate insurance rates, a simple API solution from Concar delivers multiple benefits. In contrast to hardware solutions such as OBD dongles which are expensive to deliver, store, install, maintain and replace–and require multiple direct connections to be built–our connected aftersales telematics API enables direct access to the data of millions of vehicles via a single integration, with zero follow up maintenance. Such is the growth in the popularity of our API solution, that we currently have access to the data of over 5 million vehicles, with new aftersale telematics joining every month. With significant experience in mapping technology, Concar is also adept at predicting trends in the smart usage of data going forward.

In addition, aftersale telematics as an industry is booming. From third party mobility services, to OEMs, dealerships, and other mobility companies, such has been the success of the aftersale telematics industry to date that the overall revenue pool from car data monetization on a global scale is expected to exceed upwards of USD 450–750 billion by 2030. A proven market utilised by millions of fleets on a daily basis throughout the world, the popularity of Fleet Management Software is only set to grow over the next decade, as both B2B and B2C customers demand increased personalization of vehicle services to meet their specific needs and that align with their other digital experiences.

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UBI insurance is an opportunity for SMEs, large corporations, individual drivers and car insurers alike. For the business customer, UBI insurance offers reduced insurance premiums, lower fuel and maintenance costs, secured brand reputation, accident reduction and increased driver safety. Insurers, on the other hand, can take advantage of the rapid developments in telematics technology to meet increasing customer demand for personalised insurance packages and incentivized driving.

If you’d like to find out more about aftersale telematics and our work at Concar, check out our other posts:

Why now is the time for an aftersales telematics car data marketplace

How parking could steer the connected car movement




Connected car marketplace for financial transactions