Flexible and on-demand insurance is on the rise

Andrew Ponter, insurance product manager, LexisNexis Risk Solutions, Insurance U.K. and Ireland


Consumers are increasingly looking for flexibility in their lives[i] and insurance is no different. A joint research study by LexisNexis Risk Solutions with Consumer Intelligence reveals that one in three consumers would be interested in buying a non-annualised policy (NAP) in the next 12 months, with pay-as-you-go policies having the most appeal[ii].

Insurance providers planning to tap into the growing interest in NAPs may, however, be hard pressed to find all the data they need to assess risk and compete effectively in this field unless they collaborate to share data. This is far from a new concept. Data sharing is already working very successfully in annualised policy history, quotation and claims data. As long as the insurance sector has the will to share data, existing contributory databases show there is a way.

So, what is driving the interest in NAPs? In motor insurance, attitudes to car ownership and use are changing. Some of this is down to how and where people are working with the proportion of people hybrid working rising in 2022[iii]. Financial uncertainty and growing environmental awareness amongst the UK population may also be drivers to seek different mobility solutions, including giving up the car.[iv] In fact, 2022 saw a decline in car ownership in consecutive years for the first time in a century.

In addition, car driver and passenger trips in 2021 were 32% and 38% lower respectively than levels seen in 2002 [v]. There has been a gradual decline over the past twenty years, rather than a pandemic blip.

As people change their driving habits it seems that control and flexibility are the new watchwords in motor insurance.

Anticipating this shift, our research was conducted to determine the awareness, experiences and appetite for more flexible motor insurance products, including everything from a rolling subscription to a pay-as-you go policy.

We discovered that 71% of respondents are already familiar with NAPs for motor insurance. ‘Borrowing someone else’s car’ was the most common reason for using a NAP (38%), and other reasons mentioned included ‘additional flexibility and the fact that they were using their car less.

As the cost-of-living crisis takes its toll, our research suggests that people are leaning towards flexible insurance as a type of ‘comfort blanket’ which they can switch on and off as they please, placing full control of insurance spending in their own hands.

While demand for NAPs is growing, we have also been witnessing a desire from insurance providers for the relevant data to allow them to adapt their policy offerings to match that need.

The obvious step would be to bring the same level of data enrichment to the risk assessment process of NAPs as that used for annual insurance policies. That could include information related to vehicles, individual applicants’ driving and claims histories, alongside other data sources.

However, some of this data needs to be contributory – coming from the market itself to bring additional, valuable insight around who is using NAPs, why and how.

Contributory databases have become core to the functioning of the insurance market. They give insurance providers a market-wide view of the sector’s experience with an individual to support underwriting, assist in accurate pricing and help reduce fraud. They help insurance providers understand the needs of their customers so that the products and services offered are appropriate to those needs. It works on the principle of reciprocity – only those that contribute their own data can access the data shared by the rest of the market.

Knowing that consumers are looking more for NAPs, a NAPs contributory database is a logical step step to deliver the products and services consumer increasingly demand. As a data, advanced analytics and technology provider to the insurance market, LexisNexis Risk Solutions is poised to make this new data source a reality.


[i] https://blogs.lse.ac.uk/businessreview/2022/09/12/understanding-the-flexible-consumer-lifestyle/

[ii] LexisNexis Risk Solutions partnered with Consumer Intelligence to survey more than 2,000 UK consumers, to assess levels of awareness and understanding of different types of NAP, reasons for their use; and consumers’ experiences when applying for and using these products, June 2022.

[iii] https://www.ons.gov.uk/employmentandlabourmarket/peopleinwork/employmentandemployeetypes/articles/ishybridworkingheretostay/2022-05-23

[iv] https://www.forbes.com/uk/advisor/car-insurance/driven-off-the-road/

[v] https://www.gov.uk/government/statistics/national-travel-survey-2021/national-travel-survey-2021-household-car-availability-and-trends-in-car-trips

Ad Slider
Ad 1
Ad 2
Ad 3
Ad 4
Ad 5

Subscribe to our Newsletter