Global Automotive Usage-Based Insurance Market Research Report 2023-Competitive Analysis, Status and Outlook by Type, Downstream Industry, and Geography, Forecast to 2029

Global Automotive Usage-Based Insurance Market Research Report 2023-Competitive Analysis, Status and Outlook by Type, Downstream Industry, and Geography, Forecast to 2029

With usage-based insurance, an auto insurance company calculates people's premiums based on their driving behavior. The company uses a telematics device — such as a plug-in device or mobile application — to track factors like people's mileage and speed. Automotive Usage-Based Insurance can reduce car insurance rates for drivers who drive safely.

Market Overview:

The latest research study on the global Automotive Usage-Based Insurance market finds that the global Automotive Usage-Based Insurance market reached a value of USD 43598.0 million in 2022. It’s expected that the market will achieve USD 126051.69 million by 2028, exhibiting a CAGR of 19.36% during the forecast period.

Carry out multi-channel publicity to improve social acceptance

Automotive Usage-Based Insurance is a household insurance in Europe and the United States, but in some emerging markets, people may have never heard of it, or only have a superficial understanding of it. In addition, people's prejudice against insurance and the privacy leakage of Automotive Usage-Based Insurance led to low social popularity and acceptance. Insurance companies can advertise on various online platforms, as well as in railway stations, airports, shopping malls and other places to increase the frequency of Automotive Usage-Based Insurance appearing in people's eyes; At the same time, government departments should strengthen the popularization of Automotive Usage-Based Insurance, conduct comprehensive knowledge popularization for the public, and deepen the public's understanding of UBI auto insurance; In addition, insurance companies can carry out the trial activities of Automotive Usage-Based Insurance, so that people can fully perceive the convenience that Automotive Usage-Based Insurance brings to their lives and improve the social acceptance of usage-based insurance.

The technical cost of data acquisition is high

To develop Automotive Usage-Based Insurance, obtaining a large amount of reliable and accurate data is the key. At present, UBI mainly collects data in three ways: front-mounted Telematics, rear-mounted OBD devices and smart phone APP. Among them, smart phone APP can only collect data indirectly, and the possibility of data fraud is high, so it cannot be the basis of accurate pricing. Telematics + UBI is a model in which car manufacturers install car networking equipment to obtain data. The accuracy of data obtained by this method is high, but the insurance company loses the initiative, which increases the data collection cost of the insurance company in the early stage. Post-installation OBD+UBI mode is widely used at present. Using this mode to collect customer data first requires the installation of OBD hardware equipment, which increases the cost of equipment installation. And in the early stage of development, most insurance companies increased their investment in technology and adopted price reduction and other promotion methods. The constantly high cost hindered the development of Automotive Usage-Based Insurance and product innovation of insurance companies to some extent.

Region Overview:

North America dominated the Automotive Usage-Based Insurance market in 2022, with a market share of 58.51%.

Company Overview:

Progressive Corporation is one of the major players operating in the Automotive Usage-Based Insurance market, holding a share of 18.66% in 2023.

Progressive Corporation

Progressive Corp. is an insurance holding company. engages in the provision of personal and commercial auto insurance, residential property insurance, and other specialty property-casualty insurance and related services. It operates through the following segments: Personal Lines, Commercial Lines and Property.
Allstate Insurance Company
Allstate's major business is private passenger auto and homeowners insurance, primarily offered through agencies. These products are marketed under the Allstate®, Encompass® and Esurance® brand names.

Segmentation Overview:

As for product types, the PAYD segment held the largest market share in 2022.

PAYD

The pay-as-you-drive Model (PAYD)
As the name suggests, the pay-as-you-drive model depends on your client's driving. The policy price can be calculated by the driven distance or the time (hours, days).
PAYD rationalizes the data collection process by logging the mileage automatically through telematics technology such as onboard devices; it requires credible mileage data. The data is most often transferred wirelessly and used by the insurance company to determine individual premiums based on driving distances.
PAYD is a great way to help the environment. As more companies introduce PAYD insurance, leisure driving may be reduced, and families may be more responsible about grouping trips together and making fewer unnecessary trips.

PHYD / MHYD

The PHYD model uses the motivation for safer driving for pricing calculation based on the driver's safety score.
These parameters used for score calculation is driving behavior data related to, for example, acceleration, braking, speeding, cornering, and lane changing.
The Manage How You Drive Model (MHYD)
Next-generation insurance telematics policies increasingly fall into the category of Manage How You Drive(MHYD) products. This model represents an evolution from the previous models, which mainly employ passive data collection systems.
MHYD generally includes all the essential characteristics of these previous models in terms of monitoring of driven distance (PAYD) and driving behavior (PHYD) while at the same time incorporating a considerably richer component of driver feedback.

Application Overview:

The market's largest segment by application is the segment App-based UBI, with a market share of 65.65% in 2022.

Embedded UBI

Embedded UBI is a dynamic data collection solution. By drawing data directly from the vehicle’s electronic control units (ECUs). With embedded telematics, users have access to vehicle-wide data collection, including unique and novel data points. Not only are insurers provided with a more comprehensive risk assessment of their customers but also the ability to offer pricing based on a wider range of parameters. Embedded telematics data lets them look at anything from seat belt usage to mirror adjustments, gear shifting habits, and turn-signal usage.
Embedded telematics is a highly configurable solution that allows for the creation of condition-based scenarios or event triggers.

App-based UBI

App-based UBI are a cost-effective way to track driver habits and determine unbiased premiums. A range of existing mobile applications provides insurers with a simple means of launching their own telematics-based program. Smartphone applications collect data every time the user is driving, regardless of the vehicle. Another benefit is long-term data collection, which allows the auto-insurer to reduce or increase premiums based on customer behavior over time.
App-based UBI are not without flaws. Since the software does not connect directly with the vehicle’s systems, data points are subject to a margin of error, especially when driving at lower speeds. Consequently, insurers may be unable to accurately assess the risks associated with their clients. Another issue is the portability of the UBI device. A driver may choose to leave their phone at home or turn off tracking when they plan to “bend” a few safe driver habits. Or, should a driver forgets to turn off tracking when someone else is behind the wheel, their insurance rates might be impacted by the other driver’s behaviors.

Key Companies in the global Automotive Usage-Based Insurance market covered in Chapter 3:

State Farm
Allianz
USAA
American Family Insurance
Progressive Corporation
RSA Insurance Group
Nationwide
GEICO
Liberty Mutual Insurance
Aviva
Insure The Box Limited
Travelers
Allstate Insurance Company
Farmers Insurance Group

In Chapter 4 and Chapter 14.2, on the basis of types, the Automotive Usage-Based Insurance market from 2018 to 2029 is primarily split into:

PAYD
PHYD/MHYD

In Chapter 5 and Chapter 14.3, on the basis of Downstream Industry, the Automotive Usage-Based Insurance market from 2018 to 2029 covers:

Embedded UBI
App-based UBI

Geographically, the detailed analysis of consumption, revenue, market share and growth rate, historic and forecast (2018-2029) of the following regions are covered in Chapter 8 to Chapter 14:

North America (United States, Canada)
Europe (Germany, UK, France, Italy, Spain, Russia, Netherlands, Turkey, Switzerland, Sweden)
Asia Pacific (China, Japan, South Korea, Australia, India, Indonesia, Philippines, Malaysia)
Latin America (Brazil, Mexico, Argentina)
Middle East & Africa (Saudi Arabia, UAE, Egypt, South Africa)