Cutting Costs and Growing Revenues: How Usage Based Insurance Can Help Your Business
Written by Zego
One of the greatest challenges in the business world is running a small business. Ultimately, everything is your responsibility, whether it be recruitment, training, sales, marketing, or finance operations – the list is endless, and so are the demands.
Each day, you have to deal with a tidal wave of issues and then try to stay ahead of them, so you can grow your business, find new customers, and create new services.
Fleet insurance is definitely not the most obvious aspect of your business when thinking about its growth, but the reality is - insurance is fundamental for your business to function. We get it: the price and the time spent trying to figure out where you can get the best insurance deal is frustrating. That’s why many businesses reach out to brokers to get professional advice on this and have someone with a proper understanding of the market by their side.
The good news is that the conservative world of insurance is changing, thanks to new technology like Usage Based Insurance (UBI) policy. Usage Based Insurance has the potential to reduce your insurance and business costs. It might even help you develop new services for your customers.
What is Usage Based Insurance?
Usage Based Insurance policies are different from standard fleet insurance policies. Usage Based Insurance uses vehicle data to generate and price an insurance policy based on how often and in what way a vehicle is used.
Generally, your premium will be lower because you pay for the time that your vehicles are on the road and the potential risk during that period only. How you drive a vehicle also affects the premium cost. To put it simply, if your drivers are safe and considerate on the road - their driving behaviour lowers the insurance risk. The result? Your premium decreases. One of the benefits of Usage Based Insurance policies is the transparency of how your premium is calculated, so you can see what logistical areas need more attention and what issues need to be fixed to optimise your business.
How Can Usage Based Insurance Help Me Reduce My Costs?
The cost savings work in other ways too. For example, our Usage Based Insurance policy data allows you to see how your vehicles are used, and who your best drivers are. You can also easily see who could benefit from some guidance to be more careful on the road, and become a better insurance risk.
This means that you can train and recruit better drivers who will help reduce your overall insurance premiums over time. You could even create an incentive scheme that gives some of these cost savings back to your fleet drivers as a bonus, to reward them for good driving behaviour.
Usage Based Insurance also helps make some extra cost savings, because if your drivers have good driving behaviour and are considerate of others on the road, they typically will reduce their fuel consumption; as a result - you get lower fuel bills each month.
Reduced wear and tear should cut maintenance costs and the need for spare parts too, impacting your insurance cover. So, Usage Based Insurance can save you money here again.
How Can Usage Based Insurance Help Me Build My Business?
In addition to reducing your costs, a Usage Based Insurance policy can give you insights to help create new opportunities with your existing customers and new prospects. How? By pulling out the insights about the way you use your fleet, using the data needed to calculate your premium every month.
On its own or combined with other insights, the insurance data can show you - in near real-time - the vehicle dynamics of your business. For example, the data can show you when your fleet is the busiest, and when there is slack time during the day.
For logistics companies, you can see where your vehicles are on longer journeys, missing out on potential new customers they could add to a route. So, it could potentially show patterns that allow a business to offer a better delivery service to some clients. In terms of your mileage and your insurance costs, you can begin to see which are your most profitable services and which are not.
For example, you might see that leasing extra vehicles is the right way forward for growing your business, or that you need more effective ways of using your existing fleet for economic reasons.
Altogether, this could help you see the bigger picture and rebalance your business.
How can Zego help your fleet?
We are on a journey to becoming a market leader in providing Usage Based Insurance policies to fleets and self-employed drivers in the UK. Over seven years ago, we started innovating to help SME managers and owners find better ways of insuring their vehicles.
So far, we have insured over 200,000 vehicles, with over seventeen million policies, across Europe.
We provide a robust, proven, and transparent Usage Based Insurance policy service that helps you make better use of your money and time. Learn more.