Telematics Providers Reconsider Young Driver Rates Amidst PAYG, UBI Boom
Telematics providers in the UK appear to be reconsidering their approach to offering competitive rates to young drivers, with a notable decrease in appetite for this demographic. This shift comes despite the fact that younger consumers are more likely to opt for pay-as-you-go (PAYG) or usage-based (UBI) car insurance policies.
The trend is evident in the statistics: 14.4% of consumers aged 18 to 24 have a PAYG or UBI car insurance policy, compared to a mere 2.8% of consumers aged 25 and over. This preference among young drivers is noteworthy, given that they have experienced the sharpest increases in car insurance premiums, particularly those aged 17 to 19.
Contrary to the overall market trend of a 10.5% decrease in quoted car insurance premiums over the past year, young drivers under 25 have seen a 3% increase. Despite this, younger drivers remain more likely and willing to engage with telematics technology. By 2025, several insurance companies like Admiral, Direct Line, and Young Marmalade are expected to offer attractive PAYG or UBI tariffs for drivers under 25, rewarding safe driving habits with lower premiums.
While telematics providers may be hesitant to offer competitive rates to young drivers currently, the increasing adoption of PAYG and UBI policies by this age group suggests a potential market shift. As more insurance companies cater to this demographic with telematics-based policies, young drivers may see more affordable options in the future, provided they demonstrate safe driving habits.
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