Are we slowly moving from a society where people own stuff, to a way of life where lifestyles are rented or leased? Maybe so. Certainly it’s the ambition of the WEF and many other organisations that people consume less in general, and limit car usage, or even give up driving completely.
What does that mean for insurers in the car sector? Well perhaps a gradual shift towards insuring risks like personal injury, denial of service, or lost deposits, rather than an actual write-off value for a car. Here’s the word from Cuvva, who have been doing some research.
Younger generations are experiencing a different reality to previous generations when it comes to car ownership. They’re less keen to own one, either by choice or affordability. Buying and running a car is expensive. Annual car insurance alone has skyrocketed 40%+ in the last year with younger drivers being hardest hit.
The luxury of having a car for occasional use doesn’t make sense for many younger drivers and it’s forcing a shift at scale.
According to Cuvva, UK’s leading temporary car insurance provider, over one million drivers, predominantly aged between 20-39, have already turned to the short-term insurance app to borrow cars from family and friends across Great Britain.
Data from Cuvva shows that this age group makes up a whopping 77% of total customers that are using short-term cover to get around.
THE CHALLENGE IS PRICING BASED ON LIMITED DATA
Speaking about this generational shift in driving, Freddy Macnamara, CEO at Cuvva said: “Many people can’t afford to own a car, but they still need access to one from time to time.
“The best alternative is to drive someone else’s car. They get the flexibility and convenience that comes with having access to a car, but aren’t tied down or forking out loads in running costs.”
In a recent survey amongst 2,000+ car owners in Great Britain, nearly one in five drivers (19%) confessed that they would consider selling their car if they could borrow one instead. Of those drivers, 67% were aged between 18 – 34.
Of course if people, especially younger drivers, simply pay per mile or per day for insurance, then you have rather limited data when it comes to pricing risk. On the upside the houirs of driving can be tracked via apps or telematics, on the downside you might have a tendency towards car sharing on a somewhat ad hoc basis amongst a group of Uni chums.
NEW TRENDS IN OLD CITY STREETS
It’s not just younger drivers leaning towards car sharing, saya Cuvva. One in five short-term car insurance users are aged 40+, and the number is rising rapidly. Cuvva highlighted that uptake for its short-term cover amongst this group of drivers has nearly tripled in the last five years.
One driver that chose to sell his car recently is Ruaidhri, after spending a lot of time in London and working from home more: “I didn’t need it to get around much at all. I was wasting money on petrol and upkeep. My family has cars, I just borrow them now whenever I need one.”
Macnamara says: “Cars are built to be driven, yet they’re only on the road around 5% of the time. The other 95% they’re just sitting there. Sharing cars amongst family, friends and even neighbours simply makes sense.”
The annual cost of running a car from tax and repairs to insurance and fuel is £3,186 for outer London and £3,502 for inner London, according to a recent TFL report.
All sorts of drivers are finding short-term car insurance useful to share cars, like infrequent drivers; learner drivers wanting to get practice time behind the wheel in their parents car, as it’s cheaper than being added to their parent’s policy; households sharing the family car; or university students home for the holidays.
Macnamara believes car sharing has exploded and it’s here to stay. “It addresses the evolving needs of today’s consumers, while also paving the way for a more sustainable and connected future.”
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