Usage-Based Insurance Market Size, Share, Industry, Forecast and outlook (2024-2031)

Usage-Based Insurance Market is segmented By Type (Pay-as-You-Drive (PAYD), Pay-How-You-Drive (PHYD), Manage-How-You-Drive (MHYD), Distance-Based Insurance, Others), By Vehicle Type (Passenger Vehicles, Commercial Vehicles), By Technology (OBD I-II, Smartphones, Black Box, Hybrid, Others), By Application (IoT Based Fleet Management, Semi-Autonomous & Autonomous Car, Artificial Intelligence and HMI in Transportation, Others), and By Region (North America, Latin America, Europe, Asia Pacific, Middle East, and Africa) – Share, Size, Outlook, and Opportunity Analysis, 2024-2031

Usage-Based Insurance Market Overview

The Global Usage-Based Insurance Market is expected to grow at a CAGR of 24.1% during the forecast period (2024-2031).

UBI offers prime discounts to customers based on specific driving parameters (speed, acceleration, average time & distance driven, night driving, and others) and behaviors. If we drive safely or infrequently, we will get discounts or cheaper premiums. In addition, UBI uses telematics to track real-world driving behavior, allowing the creation of risk profiles of customers based on real-world driving behavior. Moreover, the UBI offers various significant advantages such as decreased fraud as a result of having higher and better data to use in assessing claims, lower losses through better driving habits, as drivers are motivated to practice and improve their driving habits continually, deeper customer relationships, with opportunities to have more regular and positive interactions with customers (e.g., communications after an accident, updates on driving performance and premiums, even feedback after individual journeys if applicable), instead of just issuing bills and processing claims.

Usage-Based Insurance Market Summary

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Usage-Based Insurance Market Dynamics

The increasing accident is expected to boost the market growth of usage-based insurance during the forecast period. According to WHO, every year, approximately 1.35 million people die due to a road traffic crash. In addition, around 20-50 million people suffer from non-fatal injuries, with many incurring a disability resulting from their injury. In some countries, road traffic crashes cost most countries 3% of their gross domestic product. Moreover, UBI uses an OBD dongle that is becoming the most popular product category and is equipped with 27 million vehicles in 2020, representing a $475 million annual market for manufacturers, which is expected to increase the market growth during the forecast period.

Furthermore, the growing passenger car registration is expected to increase the market size during the forecast period. According to industry analysis, around 5934450 car registration has been done in January 2021. Moreover, the growing demand in the number of connected cars brings new UBI opportunities as

However, tracking mileage and behavior information in UBI programs has increased privacy concerns, and some states have enacted legislation requiring the disclosure of tracking devices and practices. In addition, some insurers restrict the data they collect. Although not for everyone, permission for information sharing is growing as more mainstream technology devices (such as tablets, smartphones, and GPS devices) and social media networks (such as Twitter and Facebook) enter the market.

Usage-Based Insurance Market Segment Analysis

By type, the market is segmented into pay-as-you-drive (PAYD), pay-how-you-drive (PHYD), manage-how-you-drive (MHYD), distance-based insurance, and others. By vehicle type, the market is segmented into passenger vehicles and commercial vehicles. By technology, the market is segmented into OBD I-II, smartphones, black box, hybrid, and others. By application, the market is segmented into IoT-based fleet management, semi-autonomous & autonomous car, artificial Intelligence & HMI in transportation, and others.

Pay-as-you-drive charges premiums based on the usage of the car. It is a plan that takes into account the km driven by a car for a fixed period and charges a premium based on it. In addition, the premium for this type of motor insurance is directly proportional to the usage of the car. Moreover, the PAYD offers various significant advantages such as lower car insurance premiums, customized cover as per preference, installation of free telematics devices, floater coverage for multiple cars, third-party coverage at all times, and save big on car insurance premiums. In addition, the company also offers significant benefits such as customization, flexibility, low premium, and telematics device.

Furthermore, it is a model of automotive insurance where policies depend upon the type of vehicle used, behavior, measured against time, distance, additional data, and location. Moreover, the company offers various significant advantages such as providing useful information, resulting in fair premiums, and making motor insurance cheaper. In addition, it has certain disadvantages such as can be expensive initially and not being suitable for new drivers.

Usage-Based Insurance Market Geographical Share

North America holds the largest market share of the usage-based insurance for the car due to the increase in the use of connected cars in this region. The U.S dominates the market in this region, and it is expected by 2035, more than 330 million units in the United States will be connected to the internet, either in multiple ways or by embedded, tethered, or via smartphone integration. In addition, roughly 97%, the U.S. is anticipated to have the highest penetration rate of connected vehicles in 2035 and is expected to grow during the forecast period.

APAC is expected to be the fastest-growing market during the forecast period due to the shifting of the largest automotive manufacturing company and the increase in accidents. China is the largest automobile market worldwide, both in terms of demand and supply. In addition, China's automobile registrations fell to 21 million units in 2019 and are expected to grow during the forecast period. Moreover, Europe and other regions are expected to contribute to significant market growth during the forecast period due to government regulation.

Usage-Based Insurance Market Companies and Competitive Landscape

The usage-based insurance market is moderated and fragmented with the presence of regional and global players. The competitive contour lies with the increase in the regional company and growing investment in upstream applications. Cambridge Mobile Telematics, Allianz SE, AXA, Aviva, Allstate Corporation, Insure The Box Limited, Liberty Mutual Insurance, Progressive corporation, UNIPOLSAI ASSICURAZIONI S.P.A, Nationwide Mutual Insurance Company are the major player in the adhesive market. The major players adopted several growth strategies such as product launches, acquisitions, and collaborations, contributing to growing the usage-based insurance market globally.

Cambridge Mobile Telematics

The company offers various significant features in the product such as mobile sensing, and IoT devices give the most accurate data, measure phone distraction & other risky behavior, fast driver feedback that allows real behavioral change, detect crashes quickly & reconstruct details for claims, and data privacy that respects drivers.

Furthermore, the company runs on hundreds of different phones, using sensors to detect driving behavior for the easy use of an app paired with the company stick-on tag to give an extra layer of ground truth, providing the most accurate telematics data available. Moreover, the company uses high-frequency sensors to identify phone distractions, classify drivers or passengers, and recognize speeding and hard braking, all without complicated installation. In addition, crash detection allows emergency services to respond to the exact location within 60 seconds; crash reconstruction provides claims adjusters with a detailed, data-driven account of a crash within 10 minutes.