Usage-based insurance: OEMs converge toward higher penetration

Encouraging safer driving practices, the potential to lower costs, and customers' willingness to try out newer insurance products are pushing greater proliferation of usage-based insurance. Backed by new technologies and the emergence of electric vehicles, automakers are also warming up to boost revenues and reshape the auto insurance sector.

Usage-Based Insurance (UBI) also known as pay as you drive (PAYD) or pay how you drive (PHYD), is a type of vehicle insurance whereby the costs are dependent upon the type of vehicle used, measured against time, distance, driving behavior and place. It also promises multiple benefits to customers, such as the choice to buy as they use their vehicles, bring down costs and encourage safer driving practices.