- This enables them to capitalize on the growing trend of UBI—especially during the pandemic.
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The UK-based insurtech, which operates a Software as a Service business model, has launched its white-label motor insurance technology solution for insurers, per Insurance Business.
By Bits was formed in 2019 after being spun off from UK-based insurtech By Miles, which offers usage-based motor insurance directly to drivers. By Bits’ new solution enables insurers to offer personalized and usage-based insurance (UBI) policies, meaning insurers can charge customers per mile they drive or based on their driving behavior, rather than demographic information.
UBI can offer consumers high policy price reductions, making it especially attractive during the pandemic. US usage-based insurtech Metromile, for example, saves customers 47% on average compared with their previous auto insurance coverage, while Allstate’s UBI offering gives users up to 25% in discounts.
Having personalized insurance policies is especially important during the pandemic: Only 22% of UK consumers used their cars during the first lockdown, meaning that many were paying for insurance despite not driving. This makes UBI especially attractive since users only pay for the miles they actually drive. Some insurers offering flexible usage-based policies have therefore seen increased uptake during the pandemic: By Miles announced a 75% increase in sales in July compared with January, while Allstate’s Milewise saw an over 150% increase in written policies in Q1 2020 compared with Q1 2019.
As consumers embrace UBI and the business model becomes more established, insurers that don’t yet offer such policies should turn to white-label solutions like By Bits’ for a quick route to market. Sixty-nine percent of global consumers would share significant data on their health, exercise, and driving habits in exchange for lower prices from their insurers, up 19% versus two years ago, per Accenture.
Additionally, nearly a third of global consumers who can drive expect to drive less in the long term than they did before the pandemic, and they expect their rates and plans to reflect their new habits, according to the same report. And while a number of big insurers already offer UBI policies, including State Farm and Progressive, others that don’t have such coverage options need to find quick ways to roll them out. By using a white-label solution, they wouldn’t have to build the service from scratch, which can reduce the time to market.