Usage-based Insurance (UBI) Market Size worth $115bn by 2026
Published Date: November 29, 2019 Authors: Ankita Bhutani, Preeti Wadhwani
Usage-based Insurance Market size is set to reach USD 115 billion by 2026; according to a new research report by Global Market Insights, Inc.
The usage-based insurance (UBI) market growth is attributed to the growing usage of smartphones, which are integrated with vehicle connectivity systems. Smartphones equipped with various built-in sensors help to collect data for telematics analytics and make it easy for auto insurance providers to record a vehicle’s location, giving them an opportunity to attract and reward customers. Also, mobile apps are cost-effective solutions, which enable telematics data collection and help insurance providers and vehicle manufacturers to share critical feedback on driving-behavior with customers. Some of the market leaders including Progressive, Nationwide, Safeco, and Metromile have introduced mobile-based apps, which give customer insights into their driving habits and insurance priced.
Intense growth of the automobile sector in Europe to augment usage-based insurance (UBI) market growth
The rapid growth of the automobile sector in the region is expected to increase the adoption of telematics insurance programs. For instance, according to the European Automobile Manufacturers Association (ACEA), in July 2019, the demand for new passenger cars in Europe increased by 1.4%, with around 1.3 million units registered across the EU market. In Europe, Germany holds a huge potential for the UBI market due to its large automotive sector. The country leads the automotive market in terms of production and sales and accounted for more than 52% of OEM market share in western Europe in 2017. Automakers are using telematics devices and in-car technologies, which enable the collection of telematics data and help insurance providers to evaluate the risk profile of a specific driver in order to reward safe drivers by offering discounts on their insurance. This represents myriad opportunities for the deployment of these policies in the Europe market.
Browse key industry insights spread across 269 pages with 294 market data tables and 29 figures & charts from the report, “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 (Passenger Vehicle, Commercial Vehicle), Industry Analysis Report, Regional Outlook, Growth Potential, Competitive Market Share & Forecast, 2019 – 2026” in detail along with the table of contents:
PHYD, primarily focusing on driving behavior to hold a major market share by 2026
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The PHYD segment is expected to hold a majority of the market share in 2018 and will maintain its dominant position over the forecast timeline. The PHYD insurance program gives insurance providers detailed information on individual driving style, gathered by telematic devices installed in a vehicle. In this insurance type, policies are based on the type of vehicle used and are measured against behavior, location, time, and distance. This enables providers to implement UBI programs, providing guidance to increase safety and facilitate reward programs for good driving.
Extensive use of black box technology for determining premiums
The black box segment is expected to hold a market revenue share of above 18% by 2026. The black box device is either physically installed in a vehicle or used as a smartphone app, which tracks various factors such as acceleration, speed, smoothness, how often a person drives, and time spent on the road to figure out drivers’ behavior & their driving patterns. It helps insurers to know the location of the car, which further helps them to personalize premium and ensures that the information about the car’s location provided by the driver is accurate.
Rising adoption of telematics in commercial vehicles to promote driver and vehicle safety
The commercial vehicles segment is anticipated to grow at a CAGR of over 22% from 2019 to 2026 due to rise in the adoption of telematics and other vehicular technologies to optimize the commercial vehicle transportation sector. The solutions used in commercial fleets help to integrate capabilities such as traffic updates, roadside assistance, and smart routing & tracking. The fleet operators are utilizing vehicle-related data to gain insights into their fleets remotely, identify rash driving habits, which helps to improve operational processes, and increase profitability.
Growing popularity of telematics insurance in the APAC is contributing to industry growth
Asia Pacific’s usage-based insurance market value is projected to exhibit a growth rate of over 25% from 2019 to 2026 due to the growing demand for automotive telematics. The rapid use of telematics solutions in the automotive industry to offer better fleet management is driving market growth. In April 2017, Toyota Fleet Management (TFM) introduced fleet telematics in the market, which helps to promote safer driving practices, optimizing the fleet asset usage for fleet managers. The rapidly growing automobile sector in the region and favorable government initiatives to control vehicle emissions are also opening new avenues for the market demand. According to the International Trade Administration (ITA), China’s automobile output is expected to reach 30 million units by 2020. As per the China Association of Automobile Manufacturers, more than 27 million vehicles were sold in 2018 including 23.79 million passenger vehicles and 4.38 million commercial vehicles.
The usage-based insurance (UBI) market players are focusing on strategic partnerships to provide new offerings to meet the demands of customers in the market. In September 2016, Progressive and Generali entered into telematics R&D agreement to develop new customized car telematics solutions. The partnership also helped to strengthen their leading positions in the markets including Europe and the U.S. In March 2018, Allstate and Uber teamed up to protect drivers and passengers by offering commercial auto coverage. The partnership enabled Allstate to expand its leadership in personal transportation solutions into the commercial insurance market. The entry of new players including Metromile and Root Insurance has also intensified the market competition.
Some of the leading UBI market players are AXA, Allstate, Sierra Wireless, State Farm, Allianz, Liberty Mutual, Nationwide, Desjardins Group, UnipolSai, Progressive, Generali, Octo, Metromile, Vodafone Automotive, Mapfre S.A, Zubie, TomTom, Insure The Box, IMS, Cambridge Mobile Telematics, and Danlaw.