Usage-based Insurance (UBI) Market Forecasts to 2030 – Global Analysis By Coverage Type (Hardware, Pay-As-You-Drive (PAYD), Pay-How-You-Drive (PHYD) and Manage-How-You-Drive (MHYD)), Vehicle Type (Passenger Cars, Commercial Vehicles, Two-wheelers and Othe

Usage-based Insurance (UBI) Market Forecasts to 2030 – Global Analysis By Coverage Type (Hardware, Pay-As-You-Drive (PAYD), Pay-How-You-Drive (PHYD) and Manage-How-You-Drive (MHYD)), Vehicle Type (Passenger Cars, Commercial Vehicles, Two-wheelers and Other Vehicle Types), Vehicle Age, Technology, Distribution Channel and By Geography

According to Stratistics MRC, the Global Usage-based Insurance (UBI) Market is accounted for $33.2 billion in 2023 and is expected to reach $151.7 billion by 2030 growing at a CAGR of 24.2% during the forecast period. Usage-based Insurance (UBI) is a type of auto insurance where premiums are determined by monitoring the policyholder's driving behavior. Data collected from telematics devices installed in vehicles, such as speed, mileage, and braking patterns, is used to assess risk and adjust insurance rates accordingly. UBI offers potential cost savings for safe drivers while promoting safer driving habits and more accurate risk assessment for insurers.

According to the Italian Insurance Supervisory Authority (IVASS), the number of UBI policies in Italy reached 7.5 million in 2020, representing a 21.4% increase from the previous year.

Market Dynamics:

Driver:

Growing consumer interest in personalized insurance solutions

The increasing demand for personalized insurance solutions is a significant driver for the usage-based insurance (UBI) market. Consumers are seeking insurance policies tailored to their individual driving habits and risk profiles. UBI programs offer the potential for lower premiums and to incentivize safe driving behaviors. As consumers become more aware of the benefits of UBI, their interest in these personalized insurance solutions grows, driving the market forward and encouraging more insurance providers to offer UBI options to meet the rising demand.

Restraint:

Limited market penetration

Despite the growing interest in usage-based insurance (UBI), market penetration remains limited. Many consumers are still unaware of UBI programs or may be hesitant to adopt them due to concerns about data privacy and the potential impact on their premiums. Additionally, some insurance providers may be reluctant to invest in the technology and infrastructure required to implement UBI programs. These factors contribute to the limited market penetration, which acts as a restraint on the overall growth of the UBI market.

Opportunity:

Advancements in telematics technology

Telematics devices are becoming more sophisticated, accurate, and cost-effective, enabling insurance providers to collect more detailed and reliable data on driving behavior. These advancements allow for more precise risk assessment and personalized pricing models. As telematics technology continues to evolve, it opens up new possibilities for UBI programs, such as real-time feedback and coaching for drivers, which can further enhance the value proposition of UBI and attract more consumers to adopt these solutions.

Threat:

Data security threats

Data security threats pose a significant challenge to the usage-based insurance (UBI) market. UBI programs rely on the collection and analysis of sensitive driver data, including location, speed, and driving habits. Ensuring the security and privacy of this data is crucial to maintaining consumer trust and complying with regulatory requirements. Any data breaches or unauthorized access to driver data could lead to reputational damage for insurance providers and erode consumer confidence in UBI programs.

Covid-19 Impact:

The COVID-19 pandemic has had a mixed impact on the usage-based insurance (UBI) market. On one hand, the reduced driving activity during lockdowns and travel restrictions has led to a decrease in the data collected for UBI programs. However, the pandemic has also accelerated the adoption of digital technologies and remote working, which could drive demand for UBI solutions in the long term as consumers seek more flexible and personalized insurance options.

The direct sales segment is expected to be the largest during the forecast period

The direct sales segment is expected to hold the largest share in the usage-based insurance (UBI) market during the forecast period. Direct sales channels allow insurance providers to have direct control over the customer relationship and offer personalized UBI programs. Through direct sales, insurers can effectively communicate the benefits of UBI, address customer concerns, and provide a seamless onboarding experience. The ability to tailor UBI offerings to individual customers and build long-term relationships through direct interactions positions the direct sales segment as the largest contributor to the UBI market.

The telematics devices segment is expected to have the highest CAGR during the forecast period

The telematics devices segment is projected to experience the highest CAGR during the forecast period in the usage-based insurance (UBI) market. Telematics devices, such as plug-in devices and smartphone apps, are the key enablers of UBI programs. They collect real-time data on driving behavior, which forms the basis for personalized risk assessment and pricing. The increasing adoption of telematics devices, driven by their declining costs and improving functionality, is expected to fuel the growth of this segment. As more insurance providers embrace telematics-based UBI programs and consumers become more receptive to using these devices, the Telematics Devices segment is poised for the highest growth rate in the UBI market.

Region with largest share:

The North American region, particularly the United States, is expected to hold the largest share in the usage-based insurance (UBI) market. Several factors contribute to this dominance, including the high adoption rate of telematics devices, a mature insurance industry, and a tech-savvy consumer base. Insurance providers in North America have been early adopters of UBI programs, leveraging advanced telematics technologies to offer personalized insurance solutions. The region's regulatory environment, which supports innovation in the insurance sector, further enables the growth of the UBI market.

Region with highest CAGR:

The Asia Pacific region is expected to exhibit the highest CAGR in the usage-based insurance (UBI) market during the forecast period. This rapid growth can be attributed to several factors, including the increasing adoption of digital technologies, rising consumer awareness about UBI, and the presence of a large and growing middle-class population. Countries like China, Japan, and India are witnessing significant growth in vehicle ownership, creating a substantial market opportunity for UBI programs. In addition, government initiatives promoting road safety and the adoption of connected vehicles further contribute to the high growth potential of the UBI market in the Asia Pacific region.

Key players in the market

Some of the key players in Usage-based Insurance (UBI) Market include Admiral Group plc, Allstate Corporation, American Family Insurance Group, Aviva plc, AXA Group, Citroen India, Cuvva Ltd., Desjardins Group, Generali Group, Insure The Box Ltd., Liberty Mutual Group, MAPFRE Insurance Company, MetLife Auto & Home, Metromile Inc., Nationwide Mutual Insurance Company, OPES Insurance, Oyster, Progressive Corporation, Root Insurance Company, Safeco Insurance, State Farm Insurance, UnipolSai Assicurazioni S.p.A. and Zurich Insurance Group Ltd.

Key Developments:

In November 2023, Oyster, a contemporary insurance platform for businesses, revealed the launch of a new rental insurance product. This groundbreaking offering introduces the first-ever usage-based rental insurance program in the United States, providing theft and damage coverage for rental bikes, electric bikes, kayaks, and paddleboards through Oyster's advanced platform for rental shops and marketplaces.

In August 2023, Citroen India collaborated with ICICI Lombard General Insurance to launch an innovative Usage-based Insurance (UBI) (UBI) program for eC3 customers. This initiative encourages customers to adopt safer driving habits and rewards them with reduced insurance premiums.

In November 2022, OPES, an exclusively digital insurance company, partnered with IMS to introduce app-based telematics insurance solutions named O-Car in Vietnam. O-Car utilizes the IMS One App SDK and IMS Wedge, a proprietary technology, to accurately identify the insured vehicle. Through this mobile application, OPES aims to target Vietnam's 3 million car drivers.

Coverage Types Covered:
• Hardware
• Pay-As-You-Drive (PAYD)
• Pay-How-You-Drive (PHYD)
• Manage-How-You-Drive (MHYD)

Vehicle Types Covered:
• Passenger Cars
• Commercial Vehicles
• Two-wheelers
• Other Vehicle Types

Vehicle Ages Covered:
• New Vehicles
• Old Vehicle

Technologies Covered:
• OBD-II Dongles
• Smartphone Apps
• Telematics Devices
• Other Technologies

Distribution Channels Covered:
• Direct Sales
• Independent Agents and Brokers
• Embedded Insurance

Regions Covered:
• North America
US
Canada
Mexico
• Europe
Germany
UK
Italy
France
Spain
Rest of Europe
• Asia Pacific
Japan
China
India
Australia
New Zealand
South Korea
Rest of Asia Pacific
• South America
Argentina
Brazil
Chile
Rest of South America
• Middle East & Africa
Saudi Arabia
UAE
Qatar
South Africa
Rest of Middle East & Africa

What our report offers:
- Market share assessments for the regional and country-level segments
- Strategic recommendations for the new entrants
- Covers Market data for the years 2021, 2022, 2023, 2026, and 2030
- Market Trends (Drivers, Constraints, Opportunities, Threats, Challenges, Investment Opportunities, and recommendations)
- Strategic recommendations in key business segments based on the market estimations
- Competitive landscaping mapping the key common trends
- Company profiling with detailed strategies, financials, and recent developments
- Supply chain trends mapping the latest technological advancements