Insurance Telematics in Europe and North America 7th Edition

Insurance Telematics in Europe and North America 7th Edition

Insurance Telematics in Europe and North America is the seventh strategy report from Berg Insight analysing the latest developments on the insurance telematics market. This strategic research report from Berg Insight provides you with 250 pages of unique business intelligence including 5-year industry forecasts and expert commentary on which to base your business decisions.

Insurance Telematics in Europe and North America 7th Edition

The integration of telematics technology constitutes the latest revolution for the automotive insurance industry. The concept of telematics is a portmanteau of telecommunications – long-distance communications – and informatics – the science of information. Telematics in general thus refers to the collection of information related to remote objects such as vehicles via telecommunications networks. The introduction of telematics technology in the context of automotive insurance is commonly referred to as usage-based insurance (UBI) or insurance telematics. Solutions of this type generally enable automotive insurers to improve pricing mechanisms based on actual driving data, gain better control of claims and differentiate their offerings to current and prospective policyholders. Variants of insurance telematics which have been popularised over the years include behaviour-based pricing models such as Pay-As-You-Drive (PAYD), Pay-How-You-Drive (PHYD) and Manage-How-You-Drive (MHYD).

The addressable market for insurance telematics is significant. A total of around 338 million vehicles were in use in the EU+EFTA+UK in 2021, including over 294 million passenger cars. In North America, an estimated total of around 300 million vehicles were in use in 2021, out of which passenger cars and light trucks are estimated to represent around 283 million vehicles. Some kind of basic automotive insurance is mandatory in most developed countries and there are in addition a number of subcategories of insurance that provide coverage for different types of unforeseen events involving motor vehicles. Motor gross written premiums in EU22+3 reached a total of over € 140.9 billion in 2021. The equivalent number for North America was US$_343.6 billion (€ 326.3 billion) in 2021.

The insurance telematics market is currently in a phase of growth which is expected to accelerate in the coming years. Europe and North America so far represent the vast majority of all insurance telematics programs and active policies from an international perspective, and the front-running national markets include the US, Italy, Canada, the UK and Germany. Berg Insight estimates that the total number of insurance telematics policies in force on the European market reached 13.6 million at the end of 2022. Growing at a compound annual growth rate of 8.9 percent, the number of insurance telematics policies in force in Europe is estimated to reach 20.7 million by 2027. In North America, the total number of insurance telematics policies in force is forecasted to increase from an estimated 16.8 million policies at the end of 2022 to reach 29.2 million policies by 2027, representing a compound annual growth rate of 11.7 percent.

In the US, the top three insurers in terms of UBI policies have all introduced smartphone-based solutions to supplement or replace the previously used OBD dongles. Several US and Canadian insurers have during the recent year re-assessed and re-launched their telematics programs.

The North American insurance carriers are also exploring claims-related insurance telematics and many are adding distracted driving parameters in their UBI. The European insurance telematics market is still dominated by insurers in Italy and the UK, with an estimated 9.8 million and 1.3 million policies respectively. The market in Germany has grown considerably during 2022 and reached about 1.0 million telematics policies. Uptake on all other markets is considerably lower, with between 40,000 and 320,000 policies in the Nordics, Iberian Peninsula, France and Benelux, and Central and Eastern Europe.

The insurance telematics value chain spans multiple industries. Insurers with notable presence in the insurance telematics market include Progressive, UnipolSai, State Farm, Allstate, Generali, Allianz, HUK-Coburg, Admiral, AXA, Liberty Mutual, Intact and Insure The Box. Insurance players can either develop telematics programs independently or rely on partners to varying degrees. Smartphone-based telematics players have taken significant market shares during the past years. Leading vendors of smartphone-based insurance telematics solutions include Cambridge Mobile Telematics and Arity. Additional vendors include DriveQuant, OSeven Telematics, Sentiance and Telematics Technologies. Important telematics suppliers active in the insurance field include OCTO Telematics, Vodafone Automotive, Viasat Group, Targa Telematics, Redtail Telematics, IMS and The Floow. Other players on the insurance telematics market include Radius Telematics, Scope Technology, LexisNexis Risk Solutions, Verisk, CCC Information Services. Automotive OEMs are increasingly taking an active part in the ecosystem. Examples include BMW, General Motors, Ford, Honda, Hyundai, Mercedes-Benz, Renault-Nissan-Mitsubishi, Stellantis, Tesla and Toyota.