The usage-based insurance market is projected to grow at a CAGR of 29.22% to reach US$114.122 million by 2025, from US$24.518 million in 2019. Usage-based insurance (UBI) is a type of automotive insurance where, instead of the premium being decided on the traditional backgrounds, it is also determined on the behavior, driving pattern, and usage of the vehicle. The demand for UBI is projected to witness substantial growth during the projected period due to the premium discounts allowing insurers to cut down on insurance premiums, along with the budding innovations in premium policies further catering to this demand. However, the high dependence and availability on traditional insurance premiums are projected to restrain the market growth in the near future. Additionally, the cost of installation and privacy concerns are also poised to confine the growth of the UBI market to a certain extent in the coming years.

By technology, the usage-based insurance market is segmented as OBD-II, smartphone, embedded system, black box, and hybrid. The telematics technologies generally used by the insurance companies are either plugged into the onboard diagnostics (OBD-II) port of an automobile or are integrated into the vehicle by the manufacturer. In 2018, non-embedded or hardware devices such as OBD-II dongle, black box, and smartphones dominated the market due to their ease of use. With minimal cost associated with dongles and smartphones, the technologies held a major chunk of the market share in the year 2018.

By package type, the usage-based insurance market is segmented as pay-as-you-drive (PAYD), and pay-how-you-drive (PAHD). Usage based-insurance schemes pay-you-drive and pay-how-you-drive are based on the fact that drivers pay insurance premiums based on their travel and driving behavior instead of a fixed price based on demographics and their driving experience only. The concept of pay-as-you-drive usage-based insurance held a significant share in the market as it was the introductory scheme of the UBI and is anticipated to grow at a good rate over the forecast period due to its growing presence in the emerging countries and rising willingness of the adult population to opt for this particular type of insurance.

By vehicle type, the usage-based insurance market is segmented as a passenger vehicle and commercial vehicle. Usage-based insurance is gaining traction across both vehicle segments since high premium rates in the majority of the countries are encouraging private as well as commercial vehicle owners to opt for insurance plans that are usage-based. The commercial vehicles dominated the UBI market in 2018. The growth is attributed to the fact that the commercial fleet companies are more vulnerable to high premiums offered through the existing policy schemes. The demand is further going to augment owing to the growing penetration of ridesharing telematics in both developed and developing countries.

By vehicle age, the usage-based insurance market is segmented as new vehicles and on-road. The on-road vehicle segment dominated the UBI market in 2018. It is due to the fact that majority of vehicles on-road don’t support embedded technologies which is one of the main reasons that hardware devices are more popular in such vehicles to provide telematics insurance to the users. The new vehicles usage-based insurance market is poised to grow at a substantial rate over the forecast period on account of the growing adoption of connected cars that supports embedded and hybrid telematics.

By geography, the Usage-based Insurance market has been segmented as Americas, Europe, the Middle East and Africa, and the Asia Pacific. The Americas and Europe, Middle East and Africa market are projected to hold the dominating share in the market and are projected to grow at substantially high rates due to the rapid penetration of telematics and connected cars in these regions. Asia Pacific region is also projected to hold a good share however due to the lack of favorable policies and IoT penetration in the automotive industry, the market is heavily restrained in the region.

The major players profiled in the Usage-based insurance market include Metromile Inc., Progressive Casualty Insurance Company, Nationwide Mutual Insurance Company, Liberty Mutual Insurance, Octo Group S.p.A, AXA, and Aviva, among others.

Segmentation

The usage-based insurance market has been analyzed through the following segments:

By Technology

OBD-II

Smartphone

Embedded System

Black Box

Hybrid

By Package Type

Pay-As-You-Drive

Pay-How-You-Drive

By Vehicle Type

Passenger Vehicle

Commercial Vehicle

By Vehicle Age

New Vehicles

On-Road Vehicles

By Geography

North America

USA

Canada

Mexico

South America

Brazil

Argentina

Others

Europe

UK

Germany

France

Others

The Middle East and Africa

Saudi Arabia

UAE

Israel

Others

Asia Pacific

Japan

China

India

Others

Frequently Asked Questions (FAQs)

Q1. What will be the usage-based insurance market size by 2025?

A1. The usage-based insurance market is projected to reach a market size of US$114.122 million by 2025.

Q2. What are the growth prospects for the usage-based insurance market?

A2. Usage-Based Insurance market is projected to grow at a CAGR of 29.22% over the forecast period.

Q3. Which region holds the largest market share in the usage-based insurance market?

A3. The Americas and Europe, Middle East and Africa market are projected to hold the dominating share in the market and are projected to grow at substantially high rates due to the rapid penetration of telematics and connected cars in these regions.

Q4. What is the size of the global usage-based insurance market?

A4. The usage-based insurance market was valued at US$24.518 million in 2019.

Q5. What factors are anticipated to drive the usage-based insurance market growth?