Usage Based Insurance Market Size, Share, Opportunities, COVID-19 Impact, And Trends 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), And By Geography – Forecast From 2022 To 2027

The usage-based insurance market is projected to grow at a CAGR of 14.19% to reach US$65.342 million by 2027, from US$25.813 million in 2020.

Usage-based insurance (UBI) is a type of automotive insurance where, instead of the premium is decided on a traditional basis, it is also determined by 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 on and availability of traditional insurance premiums are projected to restrain the market’s 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

By technology, the global usage-based insurance market landscape is segmented into smartphones, OBD-II, black boxes, embedded systems, and hybrids. The telematics technologies generally used by 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 2020, non-embedded or hardware devices such as OBD-II dongles, black boxes, and smartphones dominated the market due to their ease of use.  Because of the low cost of dongles and smartphones, the technologies captured a sizable market share in 2020.

By package type

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 like 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 the rising willingness of the adult population to opt for this particular type of insurance.

By Vehicle Type

The usage-based insurance market is segmented into passenger vehicles and commercial vehicles. Usage-based insurance is gaining traction across both vehicle segments since high premium rates in the majority of countries are encouraging private as well as commercial vehicle owners to opt for insurance plans that are usage-based. Commercial vehicles dominated the UBI market in 2020. The growth is attributed to the fact that 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

By vehicle age, the usage-based insurance market is segmented into new vehicles and on-road. The on-road vehicle segment dominated the UBI market in 2020. It is due to the fact that the 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 vehicle 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 support embedded and hybrid telematics.

By Geography

The usage-based insurance market has been divided into four regions: the Americas, Europe, the Middle East, Africa, and Asia-Pacific. The Americas and Europe, Middle East, and Africa markets 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. The 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.

Key Developments in the Market

• In July 2022, Edelweiss General Insurance, a leading provider of affordable general insurance solutions, introduced a Switch Pay and Drive add-on, expanding its usage-based motor insurance product lineup in India. The Digital Insurer, which was one of the first in the nation to introduce usage-based insurance and had been developing this category for more than two years with telematics-enabled, app-based products, has benefited from IRDAI's new guidelines allowing general insurance firms to launch tech-enabled concepts for Motor Own Damage cover.
• In February 2022, Ford and State Farm collaboratively announced the Drive Safe & SaveTM Linked Car, enabling owners of compatible connected Ford or Lincoln automobiles to take advantage of usage-based insurance (UBI). Drive Safe & SaveTM Linked Car has been launched by State Farm® and Ford, enabling owners of compatible connected Ford or Lincoln automobiles to take advantage of usage-based insurance (UBI). Customers of State Farm with qualified connected vehicles have the option to enroll in the Drive Safe & Save State Farm UBI program, which adapts a premiums-based system on the mileage and driving habits of each particular vehicle.

Usage Based Insurance Market Scope:

Report Metric	Details
Market Size Value in 2020	US$25.813 million
Market Size Value in 2027	US$65.342 million
Growth Rate	CAGR of 14.19% from 2020 to 2027
Base Year	2020
Forecast Period	2022–2027
Forecast Unit (Value)	USD Million
Segments Covered	Technology, Package Type, Vehicle Type, Vehicle Age, And Geography
Regions Covered	North America, South America, Europe, Middle East and Africa, Asia Pacific
Companies Covered	Progressive Casualty Insurance Company, Nationwide Mutual Insurance Company, Liberty Mutual Insurance, The Travelers Indemnity Company, Verizon, Telit, Guidewire Software, Inc, Zendrive Inc., Nextm2m A/S
Customization Scope	Free report customization with purchase

 

Segmentation

• 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
    • Spain
    • Others
  • The Middle East and Africa
    • Saudi Arabia
    • UAE
    • Others
  • Asia Pacific
    • Japan
    • China
    • India
    • Australia
    • Indonesia
    • South Korea
    • Others

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1. INTRODUCTION
1.1. Market Overview
1.2. COVID-19 Scenario
1.3. Market Definition
1.4. Market Segmentation

2. RESEARCH METHODOLOGY  
2.1. Research Data
2.2. Assumptions

3. EXECUTIVE SUMMARY
3.1. Research Highlights

4. MARKET DYNAMICS
4.1. Market Drivers
4.2. Market Restraints
4.3. Porter’s Five Force Analysis
4.3.1. Bargaining Power of Suppliers
4.3.2. Bargaining Power of Buyers
4.3.3. Threat of New Entrants
4.3.4. Threat of Substitutes
4.3.5. Competitive Rivalry in the Industry
4.4. Industry Value Chain Analysis

5. USAGE-BASED INSURANCE MARKET, BY TECHNOLOGY
5.1. Introduction
5.2. OBD-II
5.3. Smartphone
5.4. Embedded System
5.5. Black Box
5.6. Hybrid

6. USAGE-BASED INSURANCE MARKET, BY PACKAGE TYPE
6.1. Introduction
6.2. Pay-As-You-Drive
6.3. Pay-How-You-Drive

7. USAGE-BASED INSURANCE MARKET, BY VEHICLE TYPE
7.1. Introduction
7.2. Passenger Vehicle
7.3. Commercial Vehicle

8. USAGE-BASED INSURANCE MARKET, BY VEHICLE AGE
8.1. Introduction
8.2. New Vehicles
8.3. On-Road Vehicles

9. USAGE-BASED INSURANCE MARKET, BY GEOGRAPHY
9.1. Introduction
9.2. North America
9.2.1. USA
9.2.2. Canada
9.2.3. Mexico
9.3. South America
9.3.1. Brazil
9.3.2. Argentina
9.3.3. Others
9.4. Europe
9.4.1. UK
9.4.2. Germany
9.4.3. France
9.4.4. Spain
9.4.5. Others
9.5. The Middle East and Africa
9.5.1. Saudi Arabia
9.5.2. UAE
9.5.3. Others
9.6. Asia Pacific
9.6.1. Japan
9.6.2. China
9.6.3. India
9.6.4. Australia
9.6.5. Indonesia
9.6.6. South Korea
9.6.7. Others

10. COMPETITIVE ENVIRONMENT AND ANALYSIS
10.1. Major Players and Strategy Analysis
10.2. Emerging Players and Market Lucrativeness
10.3. Mergers, Acquisitions, Agreements, and Collaborations
10.4. Vendor Competitiveness Matrix

11. COMPANY PROFILES
11.1. Progressive Casualty Insurance Company
11.2. Nationwide Mutual Insurance Company
11.3. Liberty Mutual Insurance
11.4. The Travelers Indemnity Company
11.5. Verizon
11.6. Telit
11.7. Guidewire Software, Inc
11.8. Zendrive Inc.
11.9. Nextm2m A/S

Progressive Casualty Insurance Company

Nationwide Mutual Insurance Company

Liberty Mutual Insurance

The Travelers Indemnity Company

Verizon

Telit

Guidewire Software, Inc

Zendrive Inc.

Nextm2m A/S