The rise of Usage Based Insurance for micromobility

THE IMPACT OF MICROMOBILITY ON THE INSURANCE SECTOR. 

As the above graphic shows, micromobility will continue to grow exponentially until 2027. Drivers are beginning to leave behind the traditional vehicle ownership model and are now increasingly preferring to move around on bikes or scooters that also allow them to avoid congestion and save time when commuting. This has also weighed on the recovery of car sales: in January of this year, sales fell by 51% compared to the same month in 2020, and in February they fell again by 38.4%. Only 58,279 vehicles were sold in the last month. But the same cannot be said, for example, of scooters: according to data from internet portal idealo.es demand for this type of vehicle has increased in Spain by 142%.

Micromobility has become an indispensable part of the lives of its users in large cities. This growth has also brought about a considerable increase in the number of startups who provide micromobility services.  Because of the proliferation of new competitors, players in this ecosystem are doing everything they can to set themselves apart from the competition, and to do so many are focusing on offering added value through safety.

This is where insurance becomes particularly important, as an insurance policy that protects users and third-party liability, while giving peace of mind during travel, can make the difference and give a competitive advantage. In addition, recent norms and regulations are a pre-requisite for providers who wish to obtain the necessary licenses.

This has motivated many micromobility providers to begin offering insurance integrated into their platforms, and this will represent a source of business for the insurance industry over the coming years. Users have already started to take out customized insurance directly with micromobility service providers.

InsureTechs have also made their appearance in the sector. In fact, a study by Everis in collaboration with NTT Data reveals that in 2019, most of the investment made by InsureTechs focused on cloud solutions, mobility and Artificial Intelligence, which gives an idea of the potential investors identify in the field.

Insurers cannot allow themselves to fall behind and are looking for a way into the ecosystem, offering customized and differential policies that cover the needs of new multimodal customers who toggle between various mobility options for short urban trips, such as shared bikes and scooters.

UBI POLICIES GAIN IMPORTANCE IN MICROMOBILITY 

For insurers to continue to be relevant they must learn to better understand their customers, know their needs, preferences and behavior, to offer hyper-personalized products and services, while creating better experiences. This information is obtained thanks to customer data and analysis.

This data can be easily accessed and updated in real time in micromobility networks, thanks to GPS locators, mobile apps used by providers, and sensors installed on bikes and scooters, which help insurers get a better understanding of their customers’ driving habits.

The interest shown by insurers and InsureTechs, as well as by consumers, in sustainability and sharing personal data in exchange for a customized offer, has impacted on micromobility insurance, popularizing usage-based insurance for vehicles like bikes or scooters. Consumers demand a customized offer that is based mainly on how they use or drive the vehicle.

According to the report Insurtech Global Outlook by Everis and NTT Data, UBI policies, based on technologies like the IoT, Artificial Intelligence, or Cloud&Mobile Applications, gained importance compared to others, receiving 90% of investment.