Commercial vehicles with usage-based insurance market is projected to grow by more than 18% by 2024, according to new research from Global Market Insights, Inc.
This growth rate indicates that usage-based insurance is gaining popularity among fleets as compared with traditional automotive insurance. The firm expects the market to grow from its current value of $34 billion to over $107 billion in the next five years.
The use of telematics systems by commercial fleets to track vehicle health and driver behavior is a key accelerator of this growth. For fleets with strong safety programs and track records — and the telematics data to back it up — usage-based insurance can be a smart option for lowering rates and saving the enterprise money.
Telematics technology gives fleet owners and managers the ability to track and measure a full range of safe driving metrics such as hard braking, speeding, harsh acceleration and seat belt utilization across the fleet. The data, in turn, allows fleet managers to identify high-risk drivers and address their individual issues with the goal of building a safer group of drivers.
Telematics data can then be shared with usage-based insurance providers as evidence of a strong safety record, which can work in favor of the fleet and result in reduced premiums.
According to the report, traditional usage-based insurance uses on-board diagnostic systems (OBD-II), which allows owners to manage and remove engine malfunctions and improve vehicle reliability while reducing the fleet operations cost. By implementing OBD-II fleet management telematics systems, which track driver performance and allow vehicle utilization, organizations can reduce their fleet insurance premiums.