New Delhi, July 15, 2024 (GLOBE NEWSWIRE) -- The global usage-based insurance market is projected to reach a valuation of US$ 309.5 billion by 2032, up from US$ 56.5 billion in 2023 at a CAGR of 20.85% during the forecast period 2024-2032.
The demand for usage-based insurance market is on the rise due to its ability to offer personalized premiums that reflect actual driving behavior and mileage, leading to cost savings for consumers and enhanced risk management for insurers. One primary driver of its growth is the increasing adoption of telematics technology, which allows insurers to track and analyze real-time driving data. As of 2023, over 50 million vehicles globally are equipped with telematics devices, enabling insurers to gather detailed information on driving patterns. Additionally, the widespread use of smartphones, with over 7 billion active devices, has made it easier for insurers to offer app-based UBI solutions. The growing number of connected cars, now surpassing 200 million worldwide, further supports the integration of UBI programs. Moreover, the shift towards electric and autonomous vehicles, with sales expected to reach 20 million units this year, has opened new avenues for UBI as these vehicles typically come with advanced connectivity features.
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Supporting the growth of the usage-based insurance market are several key factors, including regulatory changes, consumer demand for fair pricing, and advancements in data analytics. Governments in regions like Europe and North America are increasingly mandating the use of telematics for young and high-risk drivers, pushing insurers to adopt UBI models. In the United States alone, over 10 million drivers are enrolled in UBI programs, reflecting a significant consumer shift towards customized insurance solutions. Research indicates that drivers enrolled in UBI programs report a 30% reduction in accident rates, demonstrating the effectiveness of this model in promoting safer driving.
Furthermore, advancements in big data analytics and artificial intelligence have enabled insurers to process vast amounts of driving data and offer more accurate risk assessments. Companies are investing heavily in these technologies, with global investments in insurtech reaching $15 billion in 2023. The increasing availability of high-speed internet, now accessible to 5.5 billion people, also facilitates seamless data transmission for UBI programs. These factors collectively contribute to the rising demand and sustained growth of usage-based insurance in the global market.
Key Findings in Usage-Based Insurance Market
| Market Forecast (2032) | US$ 309.5 billion |
| CAGR | 20.85% |
| Largest Region (2023) | North America (35.4%) |
| By Telematics Solution | Black Box (23.6%) |
| By Package Type | Pay-as-You-Drive (41.2%) |
| By Distribution Channel | Brokers & Insurance Marketplaces (48.1%) |
| By Vehicle Type | ICE (99.8%) |
| By Vehicle Application | Personal (49.5%) |
| By Vehicle Ownership | New Vehicles (88.3%) |
| Top Trends |
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| Top Drivers |
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| Top Challenges |
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Rapidly Advancing Technology and Consumer Trends Fuel Pay-As-You-Drive Insurance Demand, Contributes Over US$ 23.2 Billion
The demand for usage-based pay-as-you-drive (PAYD) car insurance is on the rise in the global usage-based insurance market due to a combination of technological advancements and shifting consumer preferences. One of the primary drivers of its dominance is the proliferation of telematics technology, which allows insurers to collect real-time data on driving behavior. As of 2024, over 120 million vehicles globally are equipped with telematics devices, facilitating the widespread adoption of PAYD insurance. The increasing availability of connected cars, with 300 million connected vehicles on the road, is another significant factor. This technology enables insurers to offer personalized rates based on actual driving patterns, providing a fairer and often more affordable option for consumers. Additionally, the rise of smartphone penetration, with 7.1 billion smartphone users worldwide, supports the seamless integration of telematics apps, making it easier for users to monitor their driving habits and insurance premiums.
Several key factors are supporting the growth of the PAYD car insurance in the usage-based insurance market. Consumer demand for flexibility and cost savings is paramount, with 85% of drivers expressing interest in insurance models that reward safe driving behaviors. Environmental concerns are also playing a role, as PAYD insurance encourages reduced vehicle usage, contributing to lower carbon emissions. Governments and regulatory bodies are increasingly advocating for such models, with 45 countries implementing policies that promote telematics-based insurance. Furthermore, the insurance industry is witnessing significant investment in telematics and data analytics, with $8 billion invested in 2023 alone. This investment supports the development of sophisticated risk assessment models, enhancing the accuracy and attractiveness of PAYD insurance. The convergence of these factors, coupled with the growing consumer awareness of the benefits of telematics, is driving the robust expansion of the PAYD car insurance market.
ICE Vehicles Dominate Usage-Based Insurance Market, Accounts for Over US$ 56.4 Billion Revenue
Internal combustion engine (ICE) vehicles remain the leading consumers of usage-based insurance (UBI) due to their widespread prevalence and the gradual integration of telematics technology. As of 2024, there are approximately 1.4 billion ICE vehicles globally, with the U.S. alone accounting for 270 million, China 300 million, and Europe 250 million. These vehicles, which include popular models like the Ford F-150 and Toyota Camry, are increasingly being equipped with telematics devices that collect data on driving behavior, mileage, and location. This data enables insurers to offer more personalized premiums based on actual usage, which is particularly appealing to the 60 million drivers who drive less than 5,000 miles annually. Additionally, the average ICE vehicle lifespan of 12 years means that a significant portion of the global fleet is still reliant on traditional engines, further cementing their dominance in the UBI market.
The growth of UBI among ICE vehicles in the usage-based insurance market is driven by several key factors. The sheer volume of ICE vehicles on the road provides a vast market for insurers to tap into. With over 200 million new ICE vehicles sold annually, the potential for UBI adoption is immense. Secondly, advancements in telematics technology have made it easier and more cost-effective to install these systems in ICE vehicles, with over 50 million vehicles now equipped with such devices. The average cost of telematics hardware has dropped to $50, making it accessible for a broader range of consumers. Furthermore, regulatory support in regions like the EU, where eCall systems are mandatory in all new cars, has accelerated the adoption of telematics. Lastly, consumer demand for more flexible and cost-effective insurance solutions is rising, with 70% of drivers expressing interest in UBI policies. These factors collectively enable the dominance of ICE vehicles in the UBI market, offering significant benefits for both insurers and consumers.
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Asia Pacific is Poised to Grow at Fastest CAGR of 21.36% in Usage-Based Insurance Market
The Asia Pacific region is experiencing a robust surge in the demand for usage-based insurance (UBI), driven by a confluence of technological advancements, increasing smartphone penetration, and a growing awareness of the benefits of personalized insurance plans. The region's appetite for UBI is notably fueled by an increase in connected vehicles, with China alone accounting for 200 million vehicles equipped with telematics devices as of 2023. Furthermore, Japan has seen a significant rise in telematics policies, reaching 15 million active users, while India has recorded 30 million vehicles utilizing UBI solutions. This technological penetration, combined with the rising middle class and economic growth, is propelling the demand for tailored insurance products that reward safe driving behaviors.
Despite the maturity of usage-based insurance market markets like Europe and North America, the Asia Pacific's unique market dynamics present fertile ground for UBI expansion. In South Korea, the integration of 5G technology has enabled real-time data collection, enhancing the precision and appeal of UBI. The region also benefits from a younger, tech-savvy population, especially in countries like Indonesia and Malaysia, where the average age of drivers is 34 years, significantly younger than the global average. Moreover, the regulatory environment in countries such as Singapore and Australia has become increasingly supportive of UBI, with Singapore implementing regulatory frameworks that promote innovation in the insurance sector. The convergence of these factors underscores why Asia Pacific is outpacing other regions in UBI adoption.
Key contributors to this growth in the usage-based insurance market include China, with its vast population and rapid urbanization, leading to 60 million new car sales annually. India follows closely, with 25 million new vehicle registrations each year, driven by a burgeoning middle class. Additionally, Japan and South Korea are pivotal, with 18 million and 10 million connected cars, respectively. Australia is not far behind, with 8 million vehicles integrated with telematics systems. These countries collectively contribute to the exponential rise in UBI demand, with their emphasis on innovation, technological integration, and a consumer base eager for cost-effective and customized insurance solutions.
Top 10 Players Holds Over 65% Revenue Share of Global Usage Based Insurance Market
The usage-based insurance market is highly competitive due to several key factors. Wherein, the increasing demand for personalized insurance solutions has driven insurance companies to compete fiercely in this space. With the advancement of telematics and data analytics, insurers now have the capability to offer usage-based insurance, which tracks an individual's behavior and driving patterns to determine their premiums. This has led to a surge in competition among top players, each vying to offer the most attractive and cost-effective solutions to customers.
Moreover, the emergence of innovative technology providers such as Cambridge Mobile Telematics and Metromile Inc. has disrupted the traditional insurance landscape, giving a boost to the usage-based insurance market. These companies specialize in developing cutting-edge telematics solutions that enable insurers to gather and analyze vast amounts of data, giving them a competitive edge in tailoring usage-based insurance products. This has compelled established insurance giants like Allianz, AXA, and All State Insurance to continuously innovate and invest in similar technology to stay ahead in the market.
The consolidation of market share in the usage-based insurance market among the top 10 players, including Liberty Mutual Insurance, Nationwide Group, Root Insurance, and Travelers Group, has intensified the competitive landscape. These companies have robust financial resources and expansive customer bases, allowing them to aggressively market and promote their usage-based insurance offerings. As a result, smaller players in the market are facing increasing pressure to differentiate themselves and carve out a niche to remain competitive amidst the dominance of these industry leaders.
Key Companies:
- Allianz
- AllState Insurance Company
- ASSICURAZIONI GENERALI S.P.A.
- AXA
- Cambridge Mobile Telematics
- Liberty Mututal Insurance Cmopany
- Metromile Inc.
- Nationwide Corp. Group
- Progressive Casualty Insurance Company
- Root Insurance
- Sierra Wireless
- State Farm Automobile Mutual Insurance Company
- The Hartford
- Travelers Group
- Verizon
- Webfleet Solutions
- Other Prominent Players
Key Segmentation Overview:
By Telematics Solutions
- On-board Diagnotics (OBD-II)
- Smartphones
- GPS Device
- Embedded System
- Black Box
- Others
By Package Type
- Pay-as-you-Drive (PAYD)
- Pay-how-you-Drive (PHYD)
- Pay-as-You-Go
- Distance-based Insurance
By Distribution Channel
- Direct
- Agency
- Bank
- Brokers & Insurance Marketplaces
By Vehicle Type
- ICE Vehicles
- Petrol
- Diesel
- Others
- Electric Vehicles
- Battery Electric Vehicle (BEV)
- Plug-in Hybrid Vehicle (PHEV)
- Fuel-cell Electric Vehicle (FCEV)
- Hybrid
By Vehicle Application
- Personal
- 2-Wheelers
- 4-Wheelers
- Commercial
- Passenger
- Heavy Vehicles
- Off-road Vehicles
By Vehicle Ownership
- New Vehicles
- Used Vehicles
By Region
- North America
- Europe
- Asia Pacific
- Middle East & Africa
- South America
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