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Usage-based Insurance Market worth over $350 Bn by 2032

  • Published Date: November 29, 2022

Usage-based Insurance (UBI) Market size is set to surpass USD 350 billion by 2032, according to a new research report by Global Market Insights Inc. The study claims that the robust landscape of the automobile sector, backed by the ongoing proliferation of connected car technologies, will drive the adoption of telematics insurance programs. The significant rise in income levels across developed and developing countries and the expanding youth populace have propelled the sales of autonomous cars, causing a massive boom across the four-wheeler industry. 

Based on estimates by the National Development and Reform Commission (NDRC), China, the country anticipates the share of smart cars with partially or fully autonomous functions to reach 50% of the new vehicle sales by 2025. On the other hand, the annual automobile production in India in 2022 stood at 22.93 million units. The expanding automobile fleet, in tandem with the rapid growth of 5G technology, enabling more efficient data collection, will accelerate business growth.

Global Usage-based Insurance (UBI) Market Size By Technology

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Especially customized insurance coverage to boost the adoption of PAYD insurance

In terms of package, the usage-based insurance market from PAYD (Pay As You Drive) segment is expected to register more than 26% CAGR from 2023 to 2032. PAYD insurance programs finalize premium costs based on the number of kilometers the car is driven. Insurance providers have been introducing additional discounts, features, etc., to ramp up their sales trajectory. Furthermore,  supplementary benefits such as no installation charges, customized protection, reduced premium cost, and own damage and third-party liability cover offered by these programs will enhance their adoption.

Technological improvements to foster the demand for telematics-based PAYD insurance

The telematics-based PAYD segment accounted for around 22% of the revenue share in 2022. This growth is attributed to the rising technological advancements and the consistent efforts of the leading insurance companies toward developing a user-friendly interface to derive better customer engagement. For instance, in September 2022, Cambridge Mobile Telematics (CMT) launched FuelStar, a new application that enables consumers to save up to 40% on gas by guiding them on how to drive more efficiently.

Browse key industry insights spread across 220 pages with 382 market data tables & 42 figures & charts from the report, “Usage-based Insurance (UBI) 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), COVID-19 Impact Analysis, Growth Potential, Regional Outlook, Competitive Market Share & Forecast, 2023 – 2032”, in detail along with the table of contents:

Reduced premium costs to increase the penetration of smartphone technology

In terms of technology, the usage-based insurance market from smartphone segment is poised to record nearly 30.5% growth rate through 2032. An increasing number of car insurance providers have been utilizing insurance telematics and smartphones to reduce costs associated with claims by keeping track of car acceleration, turns, braking, speed, and distraction. In January 2021, AXA chose Cambridge Mobile Telematics to power its young driver application and make a shift toward a smartphone-centric offering from OBD-centric.

Elevated sales trajectory to push product demand for passenger vehicles

The passenger vehicle segment held over 83% share of the usage-based insurance market in 2022. This growth is credited to a noticeable rise in the production and sales of passenger vehicles globally. Based on estimations by the International Organization of Motor Vehicle Manufacturers (OIACA), more than 14 million passenger cars were registered in the European Union and over 7 million passenger cars were sold in the Americas in 2021, depicting positive growth prospects for the industry.

Improved technological outlook to propel industry growth across North America

North America usage-based insurance market captured more than 40% of the revenue share in 2022. The improving technological landscape and the skyrocketing sales of connected and autonomous vehicles are slated to drive business expansion across the region. Besides, a number of telematics insurance companies integrating advanced solutions to deliver better packages & schemes will further proliferate the regional industry progression.

New product developments to aid the competitive landscape

Notable players operating in the usage-based insurance market are ARGO Data Resource Corporation, Allstate Insurance Company, Aviva plc, AXA Equitable Life Insurance Company, and others.These leaders are focusing on offering customized insurance coverage to their customers to strengthen their business standing.

Authors: Preeti Wadhwani, Smriti Loomba