Insurers need to see historical trends and what can be expected as the new normal in mileage accumulation.
There is no denying that the lockdowns have forced a new way of living and working including the way we drive our vehicles. Many people were unable to meet professionally or socially, leaving no need to drive anywhere. With restrictions in place, many companies sought to digitally transform their workforce for a remote operating environment leaving a permanent reduction in miles and fuel usage.
Before the pandemic, one of the most common car journeys was the daily work commute. Now that flexible and remote working has become fundamental for many employees, trips to work are drastically reduced. In general, people also like the idea of conserving and being more green-minded. This new way of commuting or lack thereof has had a definite impact on the way fuel is consumed, the accumulated mileage on a vehicle and of course how insurers assess risk and price policies.
The impact of the pandemic has certainly resulted in less driving all together. However as many ease back into work commutes and social living, the miles will start to add up again. Nevertheless, all indications point to a permanently lowered number of miles accumulated going forward. Cazoo Data Services insights recently reported an approximate 30% decrease in mileage consumption over the past 12 months. On average, commuters are now driving 30 miles fewer each week compared to their usual mileage before the first lockdown. It may not seem like much individually, but that all adds up to a massive reduction of miles travelled across the board.
How does this new reduced mileage accumulation affect automotive insurers ability to assess risk?
Insurance premiums are based on risk. The further and more often people drive, the more likely they are to be involved in an accident. Therefore, the higher the annual mileage, the higher the premium. In addition to age, home address and claims history, restricting annual mileage can also bring down insurance premiums.
With the shift to working from home proving to be successful, it’s likely that more employers will start exploring this arrangement beyond the pandemic. No one can argue how possible it is to work remotely and be productive. In many cases, productivity is even higher as many stressful elements of work and life are reduced or no longer exist. In addition to lowered premiums, there are many positive aspects to not driving or limiting the miles driven such as reducing the:
- -Time it takes to travel to work, which can become quality time or additional productivity
- -Amount of fuel used, supporting conservation
- -Less roadside accidents, reducing risk and claims
It’s important for your business to fully understand current driving trends so that you can assess risk accurately. Cazoo Data Services can help you understand your driving customers in an effective and reliable way. With the powerful data the Claims Companion and integratable API solutions can offer, Cazoo Data Services products can help insurers stay on top of claims and risk assessment. With such valuable information at the click of a button, you can price individual risk based on real-time trends and analysis accordingly and in turn, keep and earn more trusting customers with fair and accurate offerings.
If you’d like to know more about how you can access the right data to upgrade your insurance business and earn more trusting customers visit Cazoo Data Services insurance solutions.