Usage-based Insurance

Global Usage-based Insurance Market to Reach US$162.3 Billion by 2030

The global market for Usage-based Insurance estimated at US$42.3 Billion in the year 2024, is expected to reach US$162.3 Billion by 2030, growing at a CAGR of 25.1% over the analysis period 2024-2030. Pay-As-You-Drive (PAYD) Package, one of the segments analyzed in the report, is expected to record a 27.5% CAGR and reach US$84.0 Billion by the end of the analysis period. Growth in the Pay-How-You-Drive (PHYD) Package segment is estimated at 24.4% CAGR over the analysis period.

The U.S. Market is Estimated at US$12.0 Billion While China is Forecast to Grow at 23.6% CAGR

The Usage-based Insurance market in the U.S. is estimated at US$12.0 Billion in the year 2024. China, the world`s second largest economy, is forecast to reach a projected market size of US$23.8 Billion by the year 2030 trailing a CAGR of 23.6% over the analysis period 2024-2030. Among the other noteworthy geographic markets are Japan and Canada, each forecast to grow at a CAGR of 22.6% and 20.9% respectively over the analysis period. Within Europe, Germany is forecast to grow at approximately 17.0% CAGR.

Global Usage-Based Insurance Market - Key Trends & Drivers Summarized

What Is Usage-Based Insurance and How Does It Work?
Usage-based insurance (UBI) is a type of vehicle insurance that calculates premiums based on the actual usage and driving behavior of the policyholder. Unlike traditional insurance models that rely on static factors like age, gender, and location, UBI leverages telematics technology to monitor real-time data, such as mileage, speed, braking patterns, and time of day when driving. This data is then used to assess the risk profile of the driver more accurately, leading to a personalized insurance premium that reflects the individual’s driving habits. UBI programs typically use devices installed in the vehicle, smartphone apps, or built-in vehicle telematics systems to collect data. This approach not only encourages safer driving behaviors but also offers the potential for cost savings to consumers who drive less or exhibit low-risk driving patterns.

How Has Technology Enabled the Growth of Usage-Based Insurance?
The rapid advancement of telematics technology and data analytics has been a key enabler of the usage-based insurance market. Telematics devices and mobile apps can now collect and transmit vast amounts of data with high precision, allowing insurers to create more accurate and individualized risk assessments. The integration of GPS and accelerometer technologies within telematics systems helps in tracking various aspects of driving, including speed, acceleration, and harsh braking, which are critical factors in determining insurance risk. Additionally, advancements in big data analytics and machine learning algorithms enable insurers to process and analyze this data in real-time, offering dynamic pricing models that adjust premiums based on recent driving behavior. These technological advancements have made UBI more accessible and attractive to both insurers and consumers.

Where Is Usage-Based Insurance Gaining Traction?
Usage-based insurance is gaining significant traction in various markets around the world, particularly in regions with high vehicle insurance costs and a tech-savvy consumer base. North America, particularly the United States, has been a leader in adopting UBI, driven by the widespread use of telematics and a consumer preference for personalized products. Europe is also seeing a growing adoption of UBI, especially in countries like Italy and the UK, where insurance costs are high, and there is a strong regulatory push towards safer driving practices. Emerging markets in Asia and Latin America are beginning to explore UBI as well, driven by the increasing penetration of smartphones and the growing demand for cost-effective insurance solutions. Fleet management companies and commercial vehicle operators are also significant adopters of UBI, as it allows them to reduce insurance costs and monitor driver behavior across their fleets.

What Is Driving the Growth of the Usage-Based Insurance Market?
The growth in the usage-based insurance market is driven by several factors, including technological advancements, changing consumer preferences, and regulatory support. The increasing availability of affordable telematics devices and the widespread adoption of smartphones have made UBI more accessible to a broader audience. Consumers are increasingly seeking personalized products that offer cost savings and align with their individual needs, which UBI provides. Regulatory bodies in various regions are also encouraging the adoption of UBI as a way to promote safer driving behaviors and reduce road accidents. Additionally, the rising costs of traditional vehicle insurance are prompting consumers to seek alternative options like UBI, which can offer significant savings for low-mileage and safe drivers. The growing emphasis on sustainability and reducing carbon emissions is another factor, as UBI incentivizes reduced driving and more responsible vehicle use.

SCOPE OF STUDY:

The report analyzes the Usage-based Insurance market in terms of units by the following Segments, and Geographic Regions/Countries:

Segments:
Package (Pay-As-You-Drive (PAYD), Pay-How-You-Drive (PHYD), Manage-How-You-Drive (MHYD)); Technology (Black Box, OBD-II, Smartphones, Embedded Systems, Other Technologies)

Geographic Regions/Countries:
World; United States; Canada; Japan; China; Europe (France; Germany; Italy; United Kingdom; and Rest of Europe); Asia-Pacific; Rest of World.

Select Competitors (Total 11 Featured) -

• Allianz SE
• Allstate Insurance Company
• Cambridge Mobile Telematics
• Inseego Corporation
• insurethebox
• Intelligent Mechatronic Systems, Inc.
• Liberty Mutual Insurance
• Mapfre
• Modus Group
• Octo Telematics Ltd.
• Progressive Corporation
• Sierra Wireless, Inc.
• The Floow Ltd.
• TomTom International BV
• TrueMotion
• Unipolsai Assicurazioni S.P.A.
• Verizon Enterprise Solutions
• Vodafone Group PLC

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