One in three UK drivers interested in non-annualised insurance policies – LexisNexis

A new industry white paper by LexisNexis Risk Solutions has found that one in three UK drivers are interested in purchasing non-annualised policies (NAP) within the next 12 months.

LexisNexis’s paper, titled “Flexible, favourable, practical, profitable: Uncover consumer perceptions of non-annualised policies (NAPs) and their growing value in the motor insurance market,” was created together with research from Consumer Intelligence. It found that among the drivers who expressed interest in NAPs, pay-as-you-go polices had the most appeal to them. The whitepaper also noted that nearly a third of UK drivers report that they are driving less in order to keep their costs low.

Other key findings of the whitepaper included:

• Four million UK motorists have used at least one NAP during the last two years.
• Recognition of the NAP concept is high, with 71% saying they are familiar with NAPs for auto insurance.
• The most commonly cited reason for using a NAP is a need to borrow someone else’s car (38%), but other reasons for their use include a need for additional flexibility, and policyholders using their car less.
• NAP users are more likely to be younger, have higher incomes, have children in their households, and live in metropolitan areas. They are also more likely to adopt new technology quickly than non-users.
• 12% of NAP users are gig economy drivers for ridesharing services, compared to 1% of non-NAP using gig drivers.

“Consumers want choice and flexibility ― perhaps now more than ever as household budgets are squeezed. People are also thinking differently about their car use and the associated costs from an environmental perspective,” said LexisNexis Risk Solutions insurance product manager, UK and Ireland Andrew Ponter. “NAPs for motor insurance can help consumers protect themselves when car-sharing, car-swapping and for temporary use so that cover is in place for the time when and if insurance is needed.”

LexisNexis’s whitepaper comes a month after financial information firm Defaqto found that those looking to buy auto insurance are more likely to encounter additional costs when shopping around. Defaqto noted that in 2018, eight in 10 (79%) insurers did not charge set-up fees for auto insurance, but in 2023 it changed to just over five in 10 (52%) charging set-up fees. Loyal customers were also more likely to face renewal fee charges, the report uncovered.