Usage-based Insurance Market Size By Package (Pay-How-You-Drive (PHYD), Pay-As-You-Drive (PAYD) [Device-based, Telematics-based]), By Technology (OBD-II, Smartphone, Blackbox, Embedded Telematics), By Vehicle Type (Passenger Vehicle, Commercial Vehicle), Industry Analysis Report, Regional Outlook, Growth Potential, Competitive Market Share & Forecast, 2019 – 2026

Published Date: Nov 2019  |  Report ID: GMI3020  |  Authors: Ankita Bhutani, Preeti Wadhwani

Report Format: PDF   |   Pages: 269   |   Base Year: 2018




Summary Table of Contents Industry Coverage Methodology

Industry Trends

Usage-based Insurance Market size crossed USD 25 billion in 2018 and is slated to witness around 21% CAGR between 2019 and 2026.
 

Usage-based Insurance Market

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Usage-based insurance is a type of auto insurance, which leverages in-vehicle communication systems to track mileage and driving behavior. Telematics systems provide accurate feedback of driving patterns and driver safety practices, enabling insurance enterprises to dynamically change the cost of insurance based on the estimated risk. Factors, such as total miles driven, the time of day, on-road vehicle location (Global Positioning System or GPS), acceleration & braking patterns, and airbag usage, allow insurance providers to align insurance premium rates as per actual driving and reduce fraudulent insurance claims. The sustained growth in the adoption of in-vehicle connected insurance solutions for reducing unanticipated claims and incentivizing safe driving will lead to a rise in market share.
 

The usage-based insurance market growth is attributed to increasing popularity of usage-based insurance systems among insurance enterprises for improving business profitability. These insurance policies leverage the latest machine-to-machine technologies to capture dynamic data from in-car devices, enabling insurance providers to set and adjust premiums based on an individual’s driving behavior, rather than any claim history. This leads to control over claim costs, improvement in pricing models, and accelerated revenue growth. For instance, in March 2019, All State Insurance Company partnered with Uber to provide PAYD insurance for its drivers. The partnership is enabling the company to promote safe driving habits among Uber’s drivers by incentivizing them with rewards, leading to a reduction in accident insurance claims and increased revenues. Another factor contributing to usage-based insurance market revenue is the shifting focus of automotive insurance providers toward remote diagnostics. The adoption of sophisticated on-board communication devices for availing insurance provides real-time connectivity between vehicle and insurance companies, enabling them to remotely diagnose vehicle breakdown problems. Remote diagnostics solutions bundled with usage-based insurance are enabling enterprises to differentiate their offerings in a highly competitive insurance industry, creating new avenues for expanding their clientele. For instance, in January 2017, Cambridge Mobile Telematics launched DriveWell Tag, an IoT device for usage-based insurance applications with integrated roadside assistance and remote diagnostics. However, concerns over data privacy and product performance issues may hinder the market value from 2019 to 2026.
 

Usage-based Insurance Market Report Coverage
Report Coverage Details
Base Year: 2018 Market Size in 2018: Over USD 25 Billion (2018)
Historical Data for: 2015 to 2018 Forecast Period: 2019 to 2026
Forecast Period 2019 to 2026 CAGR: 21.6% 2026 Value Projection: Over USD 115 Billion (2026)
Pages: 269 Tables, Charts & Figures: 323
Geographies covered (23): U.S., Canada, UK, Germany, Italy, Spain, France, Netherlands, Austria, China, India, Japan, Thailand, Australia, Malaysia, Brazil, Mexico, South Africa, Colombia, Saudi Arabia, Qatar, UAE
Segments covered: Package, Technology, Vehicle Type, and Region
Companies covered (20): Allianz SE, Allstate Insurance Company, ASSICURAZIONI GENERALI S.P.A., AXA, Cambridge Mobile Telematics, Danlaw, Inc., Desjardins Group, Insure The Box Limited, Intelligent Mechatronic Systems Inc., Liberty Mutual Insurance, Mapfre, S.A., Metromile Inc., Nationwide, Octo Technology, Progressive Casualty Insurance Company, Sierra Wireless, State Farm Mutual Automobile Insurance Company, TomTom International BV, UnipolSai Assicurazioni S.p.A., Vodafone Automotive SpA, Zubie, Inc
Growth Drivers:
  • Growth of the automobile industry
  • Shifting focus towards remote diagnostic technology
  • Growth in the number of the connected cars bringing new UBI opportunities
  • Rising penetration of smartphones integrated with vehicle connectivity systems
  • Rapid use of UBI by insurance companies to improve profitability
Pitfalls & Challenges:
  • Data security and privacy concerns
  • Data quality issues with smartphone based UBI system
  • Increasing compatibility issues

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Growing uptake of PAYD package for leveraging mileage discounts

The PAYD usage-based insurance market is expected to register an excellent CAGR of 23% during the forecast timeline due to the growing adoption of PAYD models for reaping the benefits of mileage-based insurance premiums. As insurance costs vary with the miles driven, drivers would be able to earn savings by improving their driving patterns. For instance, in July 2018, the Canadian Automobile Association (CAA) introduced a new auto insurance program, CAA MyPace for infrequent drivers, letting drivers to pay for every 1,000 km they drive. The new program is helping the company to modernize its insurance offerings by enabling motorists to monitor vehicle mileage and pay for insurance based on that mileage. With insurance providers offering several discounts based on mileage, such as low-mileage discounts and bulk mileage purchase benefits, the adoption of PAYD package will bolster over the forecast timespan.
 

Growing popularity of connected cars fueling the embedded telematics technology

Usage-based Insurance Market Size, By Technology, 2018 (USD Million)
Usage-based Insurance Market Size, By Technology, 2018 (USD Million)

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The embedded telematics segment is anticipated to register a lucrative growth of nearly 30% CAGR in the global usage-based insurance market between 2019 and 2026 due to the surging popularity of connected cars and the increasing volumes of driver data being generated from these cars. Telematics technology enables insurance providers to leverage these vast amounts of data on car driving trends, maintenance requirements, and vehicle performance for deciding insurance premiums and improving driving habits. These systems do not rely on external devices, eliminating interoperability issues that can arise due to the use of brought-in devices. Furthermore, the embedded systems allow greater flexibility for the OEMs’ business model and enable them to offer innovative services demanded by consumers such as navigation and on-board infotainment. With the increase in the adoption of connected car technologies, next generation of vehicles will rely on built-in data connections capable of providing vast amounts of data about usage and location that can be used by insurance companies to design usage-based insurance policies and programs.
 

Passenger vehicle segment is fueling industry growth

Italy Usage-based Insurance Industry Size, By Vehicle Type, 2015 - 2026 (USD Million)
Italy Usage-based Insurance Industry Size, By Vehicle Type, 2015 - 2026 (USD Million)

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The passenger vehicle segment in Italy market held nearly 85% share in 2018 due to the growing adoption of Blackbox and OBD devices for monitoring the vehicle’s condition. These devices coupled with telematics systems provide real-time information about the vehicle’s health and other parameters such as distance traveled and driving habits. Passenger car drivers can leverage the vehicle parameter monitoring capabilities of telematics solutions for improving driving habits, leading to reduced insurance premiums and rewards for safe driving. Furthermore, additional benefits of On-Board Diagnostics (OBD), vehicle tracking features, and roadside assistance are surging the popularity of passenger car-based insurance packages.
 

Furthermore, a significant shift in the sale and production of passenger vehicles is driving the passenger vehicle usage-based insurance market demand. Passenger vehicles are the most used mode of conveyance and are likely to witness a surge in the demand in the coming years, accelerating the need for telematics devices. The increasing sales of new passenger cars will create a positive outlook for the adoption of telematics solutions, enabling insurers to leverage telematics data for determining driving behavior and devising new insurance policies accordingly.
 

Rising adoption of telematics augmenting the LAMEA market

LAMEA Usage-based Insurance Market Share, By Technology, 2018
LAMEA Usage-based Insurance Market Share, By Technology, 2018

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The Latin America & Middle East usage-based insurance industry is anticipated to exhibit an impressive growth rate of over 25% from 2019 to 2026. This is attributed to a sustained increase in the adoption of telematics solutions for augmenting insurance telematics programs across Brazil, Argentina, and South Africa. Telematic solution providers are forging strategic alliances with insurance providers to offer innovative insurance telematics solutions. For instance, in September 2017, Car Security adopted CalAmp’s telematics technology stack and CrashBox vehicle risk management services platform to streamline its connected car offerings. Under the partnership, CalAmp offers insurance companies telematics tools to optimize the claim management process. Furthermore, growth in the number of connected cars in the region will also accentuate market demand. As connected cars are equipped with advanced in-car technologies and sensors, automakers and insurance agencies can easily collect driving data to analyze risks and offer new value-added offerings to policyholders. This will lead to a rapid surge in the sales of new insurance policies and packages, augmenting the market value.
 

Acquisitions and product launch key strategies for usage-based insurance market growth

Prominent players operating in the market are focusing on strategic acquisitions and strengthening their R&D capabilities to offer innovative solutions and maintain a competitive advantage. For instance, in October 2017, Octo Telematics acquired the assets of Willis Towers Watson to strengthen its insurance telematics portfolio. Following the transaction, the company also developed an alliance with Watson on telematics opportunities to enhance the company’s offerings. Furthermore, leading players are collaborating with solution providers and expanding their partner network for achieving significant business growth. For instance, in September 2018, the Progressive Casualty Insurance Company collaborated with various Electronic Logging Device (ELD) vendors to collect vehicle data as a part of the Federal Motor Carrier Safety Administration's (FMCSA) final ELD mandate. This has enabled the company to introduce an ELD usage-based insurance program for commercial truck drivers.
 

Some of the major companies operating in the market are Allianz SE, Danlaw, Inc., Cambridge Mobile Telematics, Allstate Insurance Company, Desjardins Group, UnipolSai Assicurazioni S.p.A, Liberty Mutual Insurance, Assicurazioni Generali S.P.A, AXA, Mapfre, S.A., Intelligent Mechatronic Systems Inc, Metromile Inc, State Farm Mutual Automobile Insurance Company, Octo Technology Nationwide, Progressive Casualty Insurance Company, Insure The Box Limited, Sierra Wireless, TomTom International BV, Vodafone Automotive S.p.A, and Zubie, Inc.
 

The usage-based insurance market research report includes in-depth coverage of the industry with estimates & forecast in terms of revenue in USD from 2015 to 2026 for the following segments:

By Package

  • PHYD
  • PAYD
    • Device-based
    • Telematics-based

By Technology

  • OBD-II
  • Smartphone
  • Black Box
  • Embedded Telematics

By Vehicle Type

  • Passenger Vehicle
    • OBD-II
    • Smartphone
    • Black Box
    • Embedded Telematics
  • Commercial Vehicle
    • OBD-II
    • Smartphone
    • Black Box
    • Embedded Telematics

The above information has been provided for the following regions and countries:

  • North America
    • U.S.
    • Canada
  • Europe
    • UK
    • Germany
    • France
    • Spain
    • Italy
    • Austria
    • Netherlands
  • Asia Pacific
    • China
    • India
    • Japan
    • Australia
    • Thailand
    • Malaysia
  • Latin America, Middle East & Africa
    • Brazil
    • Mexico
    • UAE
    • Qatar
    • Colombia
    • South Africa
    • Saudi Arabia
       

Frequently Asked Questions (FAQ) :

Usage-based insurance (UBI) is a type of auto insurance, which leverages in-vehicle communication systems to track mileage and driving behavior.
The UBI policies leverage the latest machine-to-machine technologies to capture dynamic data from in-car devices, enabling insurance providers to set and adjust premiums based on an individual’s driving behavior, rather than any claim history. This leads to control over claim costs, improvement in pricing models, and accelerated revenue growth.
The PAYD package segment is expected to register an excellent CAGR of 23% during the forecast timeline due to growing adoption of PAYD models for reaping the benefits of mileage-based insurance premiums.
The embedded telematics segment is anticipated to register a lucrative growth of nearly 30% CAGR in the global market between 2019 and 2026 due to surging popularity of connected cars and the increasing volumes of driver data being generated from these cars.
The Latin America & Middle East usage-based insurance (UBI) market is anticipated to exhibit an impressive growth rate of over 25% to 2026. This is attributed to a sustained increase in the adoption of telematics solutions for augmenting insurance telematics programs across Brazil, Argentina, and South Africa.

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