Usage-based Insurance (UBI) Market Size - By Package (Pay-How-You-Drive (PHYD), Pay-As-You-Drive (PAYD), Manage-How-You-Drive (MHYD)), Technology, By Vehicle (Passenger, Commercial), By Vehicle Age, By Distribution Channel & Forecast, 2024 - 2032

Usage-based Insurance Market Size

Usage-based Insurance Market size was valued at USD 52.1 billion in 2023 and is estimated to register a CAGR of over 24% between 2024 and 2032. Usage-based insurance, a type of auto insurance, utilizes in-vehicle communication systems to monitor mileage and driving habits. Telematics systems offer precise insights into driving patterns and safety practices, empowering insurers to adjust premiums in real time based on the perceived risk.
 

Metrics such as total mileage, time of travel, GPS-tracked vehicle location, acceleration, braking, and even airbag deployment, allow insurers to tailor premiums to actual driving behaviors, curbing fraudulent claims. The increasing adoption of these in-vehicle connected insurance solutions, aimed at curbing unexpected claims and promoting safer driving, is set to drive market share in the industry.
 

The surge in usage-based insurance market growth is primarily driven by insurance companies embracing UBI systems to enhance profitability. These policies leverage cutting-edge machine-to-machine technologies, capturing real-time data from vehicles to personalize premiums based on driving behavior rather than just historical claims. This approach not only reduces claim costs but also refines pricing models, fueling revenue growth.
 

In August 2023, Citroen introduced a Usage-Based Insurance (UBI) program for buyers of its electric vehicle, the eC3, in collaboration with ICICI Lombard General Insurance. This innovative insurance model is designed to reward safe driving behaviors and promote responsible driving habits among eC3 owners. Drivers demonstrating safe driving habits will benefit from lower renewal premiums. This approach encourages safer driving practices, potentially reducing the risk of accidents. Additionally, automotive insurers are increasingly focusing on remote diagnostics. By integrating advanced onboard communication devices, insurers can now remotely diagnose vehicle issues, setting themselves apart in a competitive usage-based insurance market.
 

In addition to this, companies are utilizing advanced analytics and predictive modeling techniques to analyze telematics data effectively. This helps in better risk assessment, pricing accuracy, and identifying trends in driver behavior. For instance, in September 2023, Definite, a leading Canadian property and casualty insurer, has launched a groundbreaking usage-based insurance (UBI) product called Sonnet Shift. This innovative offering is the first of its kind in Canada, providing Sonnet customers in Ontario with personalized insurance experiences that promote safer driving habits and give drivers more control over their premiums.
 

Usage-based insurance (UBI) leverages real-time data to assess and price insurance policies based on individual driving habits. While this approach enhances safety and offers tailored benefits, it raises concerns over privacy and data security. The extensive data collection, covering aspects such as location, speed, braking, and driving duration, increases the risks of unauthorized access, breaches, and misuse. Insurers are, therefore, compelled to fortify their security protocols and adhere to stringent data protection laws, notably GDPR and CCPA.
 

Coping with the vast data volume demands robust storage, processing, and analytics capabilities, necessitating sophisticated data management solutions. Moreover, the challenge grows further as insurers must anonymize data for privacy while extracting valuable insights. Achieving this balance mandates continual enhancements in encryption, access controls, and regulatory adherence.
 

Usage-based Insurance Market Trends

Technological advancements are reshaping the landscape of usage-based insurance (UBI), influencing the way to assess risk and price policies among insurers. A key trend is the integration of advanced telematics systems, encompassing GPS and speed monitoring, directly into vehicles and mobile devices. These systems furnish real-time driving behavior data, enabling insurers to offer precise and current pricing.
 

In June 2024, Intuit announced the acquisition of Zendrive, a provider of mobility risk intelligence, to enhance its usage-based auto insurance product, Karma Drive. This acquisition aims to accelerate the development and adoption of Karma Drive, which utilizes telematics to offer personalized insurance pricing based on driving behaviour. It further allows Intuit to integrate Zendrive's technology and expertise into Karma Drive, enhancing its capabilities to provide real-time feedback on driving habits and potential discounts before purchasing a policy.
 

Moreover, insurers are increasingly turning to artificial intelligence (AI) and machine learning algorithms to filter through vast datasets, pinpoint patterns, and enhance pricing accuracy, thereby fostering competitiveness. The advent of 5G technology promises swifter and more reliable data transmission, facilitating real-time processing of telematics data. Furthermore, the potential of blockchain technology is being explored to bolster data security, and transparency, and streamline claims processing. Leading firms such as Cambridge Mobile and Octo Telematics are at the forefront, crafting innovative telematics solutions that are propelling the UBI market towards enhanced efficiency, effectiveness, and heightened customer satisfaction.
 

Usage-based Insurance Market Analysis

The market is divided into OBD-II, Black Box, Smartphone, and Embedded telematics. In 2023, OBD-II accounted for over 49% of the market share. Given the rising popularity of connected cars and the subsequent surge in driver data, telematics technology has become pivotal. It empowers insurance providers to tap into this wealth of information, covering driving patterns, maintenance needs, and overall vehicle performance. As the adoption of connected car technologies escalates, the next wave of vehicles is poised to feature integrated data connections. These connections will furnish insurers with extensive usage and location data, instrumental in crafting Usage-Based Insurance (UBI) policies and initiatives.
 

For instance, in November 2022, CerebrumX announced a partnership with Ford to enable usage-based insurance (UBI) solutions. This collaboration aims to leverage connected vehicle data to provide personalized insurance offerings based on individual driving behaviors, enhancing the overall insurance experience for consumers. The partnership will utilize telematics data collected from Ford vehicles, allowing insurers to assess driving habits in real-time. This data will help in determining insurance premiums based on users’ driving frequency and behaviour.
 

The usage-based insurance market is categorized into passenger vehicle, and commercial vehicle. Passenger vehicle is expected to reach over USD 285.9 billion by 2032. Passenger vehicle is the most frequently used vehicle type by private individuals and constitute a large part of the automotive market. This higher level of ownership generally leads to a greater number of UBI products aimed at individual drivers. The UBI model, which uses telematics data to evaluate driving behavior, is particularly suitable for passenger vehicles where transportation patterns can be effectively monitored and analyzed.
 

This allows insurers to tailor premiums to specific driving characteristics such as speed, braking, and mileage, which are more relevant to passenger cars rather than commercial vehicles or fleets. For instance, in March 2021, Hyundai launched a usage-based insurance (UBI) program that allows customers to potentially save money on their auto insurance premiums based on their driving behavior.
 

The UBI program relies on travel-time data and driving-behavior data using vehicle sensors and Hyundai's Blue Link telematics. The program aligns with Hyundai's broader strategy to enhance the in-car experience and embrace car users through its Hyundai Connected Mobility initiative, which aims to offer personalized experiences and value-added services through mobility, connected cars, and data services.
 

North America holds a significant share, accounting for over 40% of the usage-based insurance market in 2023. The demand for UBI insurance in the region is growing rapidly, due to increasing customer demand for personalized insurance and telematics infrastructure. For instance, in February 2022, Mercury Insurance made its usage-based insurance (UBI) app available to drivers in New Jersey. This initiative allows policyholders to potentially lower their insurance premiums based on their driving habits.
 

In Asia Pacific, the market is booming, driven by increased traffic and advances in telematics technology. Countries such as China and India have been achieving rising profits, owing to improved infrastructure and controlled subsidies. However, limitations such as privacy issues and different technology usage patterns affect the growth of the market.
 

UBI for South America and the Middle East is expected to grow impressively between 2021 and 2032. This is due to the continued rise in telematics solutions to expand telecom insurance programs in the UAE, Brazil, Argentina, and South Africa. Telematics solution providers contract with insurance companies to provide telematics insurance solutions.
 

Further, the growth of connected cars in the region is expected to drive growth in the market. Since connected cars are equipped with the latest technology and sensors, automakers and insurance companies can easily collect driving data to analyze risks and provide new and better insights. improved offers. This will lead to a rapid increase in sales of new insurance policies and materials, expanding the market.
 

For a few past years, the UAE has been heavily investing in vehicle safety, due to the growing number of vehicles due to growing tourism and immigration. Considering the growing demand for vehicles and its insurance in UAE, Beema, a Dubai-based insurance innovator, January 2022, launched a usage-based car insurance program called "Beema SmartDriver" that rewards users for safer and more responsible driving. This is the first product of its kind in the UAE market and can be purchased and activated online through Beema's mobile app.
 

Usage-based Insurance Market Share

UNIPOLSAI ASSICURAZIONI S.P.A and Progressive Insurance dominate the market with over 10% of the market share. UnipolSai was one of the early adopters of telematics in insurance, allowing them to refine their UBI offerings over time and establish a strong market presence.
 

They have heavily invested in telematics technology, providing detailed data analytics that enables precise risk assessment and personalized premiums. UnipolSai offers a range of innovative UBI products tailored to different customer segments, enhancing their appeal and customer retention.
 

Progressive has effectively marketed its UBI program, Snapshot, making it one of the most recognized and trusted UBI offerings in the United States. Progressive's early and continuous investment in telematics and data analytics has enabled them to offer highly competitive and accurate personalized insurance products. Progressive focuses on user-friendly technology and transparent pricing models, enhancing customer satisfaction and loyalty.
 

Usage-based Insurance Market Companies

Major players operating in the usage-based Insurance (UBI) industry are:

• UNIPOLSAI ASSICURAZIONI S.P.A
• Progressive Insurance
• AllState Insurance Company
• State Farm
• Liberty Inusrance
• Nationwide
• ALLIANZ SE
• AVIVA
• AXA
• MAPFRE SA
   

Usage-based Insurance Industry News

• In November 2023, NEXT Insurance, partnered with Allstate, to combine the companies' small insurance expertise to develop and deliver new and unique products to a large underserved market, as well as strengthening its commitment to deepening the insurance relationship with Allianz.
   
• In January 2024, Zendrive will expand its Lens (IQL) insurance program in partnership with Progressive.
   

The usage-based insurance (UBI) market research report includes in-depth coverage of the industry with estimates & forecast in terms of revenue (USD) from 2021 to 2032, for the following segments:

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Market, By Package

• Pay-How-You-Drive (PHYD)
• Pay-As-You-Drive (PAYD)
  • Device- based
  • Telematics-based 
• Manage-How-You-Drive (MHYD)

Market, By Technology

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

Market, By Vehicle

• Passenger vehicle
  • OBD-II
  • Black Box
  • Smartphone
  • Embedded telematics 
• Commercial vehicle
  • Light Commercial Vehicles (LCVs)
    • OBD-II
    • Black Box
    • Smartphone
    • Embedded telematics
  • Medium Commercial Vehicles (MCVs)
    • OBD-II
    • Black Box
    • Smartphone
    • Embedded telematics
  • Heavy Commercial Vehicles (HCVs)
    • OBD-II
    • Black Box
    • Smartphone
    • Embedded telematics

Market, By Vehicle age

• New Vehicles
• Used Vehicles

Market, By Distribution channel

• Direct Sales
• Brokers and Agents
• Bancassurance
• Online Platforms

The above information is provided for the following regions and countries:

• North America
  • U.S.
  • Canada
• Europe
  • UK
  • Germany
  • France
  • Italy
  • Spain
  • Netherlands
  • Austria
  • Rest of Europe
• Asia Pacific
  • China
  • India
  • Japan
  • ANZ
  • Southeast Asia
  • Rest of Asia Pacific 
• Latin America
  • Brazil
  • Mexico
  • Colombia
  • Rest of Latin America
• MEA
  • UAE
  • South Africa
  • Saudi Arabia
  • Rest of MEA