The findings are detailed in a new white paper, “Flexible, favourable, practical, profitable: Uncover consumer perceptions of non-annualised policies (NAPs) and their growing value in the motor insurance market.”
In preparing the white paper, LexisNexis Risk Solutions undertook research with Consumer Intelligence to demonstrate the awareness, experiences and appetite for temporary, short-term and pay-as-you-go motor insurance cover. In addition, it also highlights the need for greater industry collaboration to build more intelligence around non-annualised policies to support underwriting, pricing and reduce fraud.
Key findings:
• 4 million U.K. motorists have used at least one NAP during the last two years
• Recognition of the concept is high with 71% saying they are familiar with NAPs for motor insurance
• The most commonly cited reason for using a NAP (38%) is a need to borrow someone else’s car, but other reasons for their use include a need for additional flexibility and policyholders using their car less
• NAP users are more likely to be younger, have higher incomes, have children in their households and live in metropolitan areas. They are also more likely to adopt new technology quickly than are non-users
• 12% of NAP users are gig economy drivers for ridesharing services, compared to only 1% of non-users
Andrew Ponter, insurance product manager, U.K. and Ireland, LexisNexis Risk Solutions, said, “Consumers want choice and flexibility perhaps now more than ever as household budgets are squeezed. People are also thinking differently about their car use and the associated costs from an environmental perspective. NAPs for motor insurance can help consumers protect themselves when car-sharing, car-swapping and for temporary use so that cover is in place for the time when and if insurance is needed.
“Our research has been driven by the insurance market’s appetite for greater insights around a NAP data enrichment solution. We are working with insurance providers to explore how shared data on NAP policies could be used to refine the design, risk assessment and distribution of these solutions to benefit consumers and insurance providers alike.”
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