Usage-based Insurance is a fairly new trend in the market and going by the attraction for industry players it is getting, a good growth of this market is expected over the forecast period. Usage-based insurance (UBI) is sometimes also referred to as pay-as-you-go or pay-as-you-drive insurance both by customers and insurance providers. Pay-per-mile is also a way to see this type of vehicle insurance which takes into account parameters like distance traveled by a vehicle, the type of terrain it is driven in, and how well it is driven. Depending on the program, an auto insurer plans to opt, telematics units can collect data based on many other parameters and feed it into the insurers’ systems.

Telematics devices can either be tethered or be embedded into the vehicle which is to be monitored, and collect every bit of information ranging from how a driver is accelerating or braking while driving, how high is his/her control over the steering wheel, where he/she is driving and/or for how long a driver is behind the wheel. Telematics units send this data to respective insurers, who, with the help of advanced systems, keep analyzing these data sets to charge best possible premium from customers. For instance, companies track the number of miles a vehicle is driven and decide premium for customers under their pay-as-you-go or pay-per-mile insurance program. Every time a driver reaches a specified increment in distance travelled, the insurance company charges some amount. This means that people who do not take their vehicle out on road very often can get better discounts than other customers since their vehicle is prone to lesser risks on road as compared to that of other people.

Some companies can choose to continuously monitor the driving behavior of customers over their insurance cycle, and reward drivers with good risk profile by giving them lucrative discounts on their premiums. Some very extensive usage-based insurance policies also monitor and take into account how frequently and how hard a driver hits the accelerator or brake pedal. A good number of benefits of using telematics in vehicles are pushing people towards them. For instance, ability of some telematics devices to automatically call emergency services in the event of an accident, and provide them with accurate location and other vital information about the vehicle, has been proven life-saving by many customers. The increase in the demand for vehicle telematics solutions is evident from the solid growth of vehicle analytics market.

According to a report from Knowledge Sourcing Intelligence, LLP, the global market for vehicle analytics software and services was valued at US$24.214 billion in 2019, and is expected to grow at a CAGR of 14.31% over the forecast period (2020 to 2025) to reach a total market size of US$54.019 billion in the final year. According to the report, North America and Europe together account for the largest market share on account of availability of state-of-the-art infrastructure which supports the adoption of these solutions across these regions. Since UBI relies on telematics systems embedded or tethered in a vehicle, increasing adoption of these solutions will continue to drive with it the growth of Usage Based Insurance Market.

The usage based insurance market growth is also attributed to higher efficiency, telematics solutions add to the overall process of making claims, for both customers and insurers. In a conventional setting, the overall processing of making claims is fairly complex and time consuming. Since most of the road accident cases miss any independent witnesses, insurance companies have to rely on manual interrogation in order to pull out information required by them for processing such claims. Real time monitoring of vehicle health, coupled with continuous monitoring of driver’s driving behavior, makes it easier for insurance companies to process claims in a very efficient manner, thereby saving them time and money. Many vehicle insurance companies have already adopted this practice and are witnessing great results with its implementation. Allianz, for instance, offers BonusDrive telematics auto insurance as part of its offerings.

The product uses telematics to continuously monitor driving behavior of customers and rewards safe drivers with discounts on their next premium. Another great feature of this offering is its rewarding feature based on miles driven by customers. After every 100 kms driven by a customer, and data transmitted to the insurer, Allianz rewards the customer with a one-time start bonus of 10% along with additional bonus of 30% every year. With average cost of the plan as low as €84 per year, the product offers additional safety features to the customers through a dedicated app.

The company has been showing great interest in this field and we expect some more products from the company to enter the market in the near future. Metromile, another popular car insurance company, is also working rigorously into leveraging the growth potential UBI holds. In 2016, the pay-per-mile insurance company secured a funding of $191.5 million, which the company used in catalyzing its growth in this business. Later, in 2018, the company secured another funding of $90 million from a round led by Tokio Marine Holdings, Inc. and Intact Financial Corporation. Many automakers are also pumping investments into this market in order to capitalize on the growth opportunity which exists across regions. Hyundai, for instance, in April, 2018, entered into an agreement with auto insurer Verisk Analytics, Inc. under which, the automaker will channel data, which its connected car owners agree to sharing, with the insurance company. With this, the automaker became the third OEM after General Motors and American Honda Motor Co., Inc. to implement this strategy. Although many countries still do not have the infrastructure required for adopting this practice, huge investments are being made by many governments and enterprises into integration of technology into infrastructure. The key players in the market are investing heavily into development of advanced solutions in order to offer improved and new products to customers across regions. As market players continue to expand their global footprints by implementing this strategy, a very solid market growth is expected over the projected period.

Chain drives are is the mechanical system that uses various types of chains for their applications to transmit the power or movement of heavy loads. These drives have the ability to operate smoothly at considerably higher temperatures and can withstand operating with chemicals and under abrasive conditions further making them suitable for numerous end-user industries including construction, oil and gas, automotive, and agriculture among others. Significant growth of these industries is anticipated to be a key factor bolstering the global chain drives market growth during the next five years. Furthermore, the application of chain drives further does not incur any loss of power and are considered more efficient than belt drives making them suitable for various high-speed manufacturing activities.

The global chain drives market is projected to show decent growth over the course of the next five years. The major factors that are supporting the growth of the market include a rapid increase in the manufacturing and construction activities around the globe on account of urbanization and rapid industrialization. Furthermore, booming initiatives towards infrastructural development in many developing economies is further driving the demand for chain drives for lifting and shifting of heavy loads, thereby positively impacting the market growth during the coming years.

Furthermore, the inclination of industries towards industrial automation is also anticipated to be a major factor augmenting the opportunities for the global chain drives the market to grow in the near future.

However, the market may be restrained by the fact that the recent outbreak of the novel coronavirus disease has led a halt in the industrial activities in major countries as numerous government measures have further led to a temporary shut down in the operations of major end-user industries such as automotive and construction among others. This, in turn is projected to inhibit the demand for these solutions or systems during the period on the next eight to ten months and thereby moderately hamper the market growth.

Growing automation across the industries

One of the major factors driving the global chain drives market growth is the growing adoption of automation solutions across the various industries including manufacturing, automotive, and food and beverage among others. The primary application of these drives is for handling the materials across these industries. A rapid adoption of automation solutions will further positively impact the demands for chain drives and thereby add up to the market growth.  As the global industry scenario is getting complicated and is urging the industries to increase their efficiency, reduce their overall operational costs, and decrease the time requires to complete a process. There is a burgeoning demand for various automation solutions from various industries in order to maximize their productivity, increase profits and gain a competitive edge over the other players, thus driving the growth of the market over the forecast period. In addition, the burgeoning demand from the electronics industry in China and the automobile industry in counties of the Asia Pacific region like India coupled with evolving industries of other regions is bolstering the demand further over the forecast period.

Industry 4.0 is the trend towards industrial automation involving various solutions and systems among other technologies related to manufacturing and other industries. These drives hold the potential to enhance the production and performance of different industries such as automotive, manufacturing among others owing to the fact that they can aid in smooth manufacturing, reducing costs, and increasing operational efficiency. Moreover, the booming initiatives by the government of various developing countries towards the adoption of Industry 4.0 with an aim towards the preparation of a globally competitive industry is also driving the demand for various automation solutions for the improvement of the operational efficiencies of the industries is also considered to be a major factor opportunity for the market to surge in the near future. For example, in April 2018, The Ministry of Industry Indonesia launched the ”Making Indonesia 4.0”, an initiative in order to accelerate the growth of the five major focus sectors mentioned in this initiative which are automotive, food and drinks, textile, electronics, and chemicals. This initiative was launched in order to boost the country’s global position and to measure and asses the progress, the index “INDI 4.0” was launched. Similarly, in Germany, the megatrend of smart manufacturing i.e. the Industrie 4.0 is also one of the major factors considered to propel the market for chain drives as the growth of smart manufacturing is anticipated to augment the demand for these systems.

Asia Pacific to hold a noteworthy share

Geographically, the global chain drives market has been segmented into North America, South America, Europe, Middle East and Africa, and Asia Pacific. The Asia Pacific region is projected to hold a notable share in the global market owing to the presence of a vast manufacturing base in major countries like India, China, and Vietnam among others. The impressive economic growth and government initiatives towards uplifting the infrastructure in the developing economies of the region is also considered to be a major factor bolstering the chain drives the market growth in the APAC region. North America and Europe will further show robust growth owing to the high adoption of automation solutions in the industries across these regions coupled with the rapid integration of Industry 4.0 in countries like the United States and Germany among others.

ABOUT THE AUTHOR:

Rachit Gulati is a Market Research Analyst at Knowledge Sourcing Intelligence, working on estimates and global/regional specific reports on multiple industries ranging from automation to food and beverages, with a special knack for automotive and healthcare. With the addition of his formal education in Economics, Commerce, and Finance, he is able to provide more light on the macro aspects of the story. To read more articles by him, and for more information regarding multiple global markets, visit www.knowledge-sourcing.com.