The global usage-based insurance market size was valued at USD 28.7 billion in 2019, and is projected to reach USD 149.2 billion by 2027, growing at a CAGR of 25.1% from 2020 to 2027.
Factors driving the usage-based insurance market include flexible insurance premium, lower accident & vehicle theft possibilities, accurate & timely data collection, and lower fuel consumption.
Usage-based insurance (UBI) is a telematics-based insurance service in which premiums are based on driving behavior of consumers. Type of road used, braking, and cornering pattern are amongst the factors according to which the premiums are charged. Usage-based insurance includes different services such as pay-as-you-drive (PAYD), pay-how-you-drive (PHYD), and manage-how-you-drive (MHYD).
Players have adopted partnership and expansion as their key strategies to increase their market share. For instance, Progressive Corporation, entered into a partnership with Zubie, a U.S. based telematics solution provider. Local companies, such as Admiral Group plc, Allstate Corporation and others primarily in developed markets, offer tough competition to the established players. Privacy concerns and increase in telematics installation cost have posed major challenges for manufacturers. The key developmental strategies adopted by the companies are discussed in the report.
The global usage-based insurance market is segmented based on type, technology, and geography. The segmentation by type includes pay-as-you-drive (PAYD), pay-how-you-drive (PHYD), and manage-how-you-drive (MHYD). On the basis of technology, the market is divided into OBD-II, smartphone, hybrid, and black-box.
Manage-how-you-drive (MHYD) segment is anticipated to grow at the fastest rate during the forecast period, as it provides higher level of flexibility and freedom to the customers. In terms of technology, Black Box dominates the market, accounting for over 60% of the total market revenue. From a growth perspective, smartphone technology is projected to exhibit the highest CAGR over the forecast period.
Geographically, the market is classified into North America (U.S. and Rest of North America), Europe (Italy, UK, Germany, France and Rest of Europe) Asia-Pacific (Japan, Australia and Rest of Asia-Pacific), and LAMEA (Africa and Rest of LAMEA). Presently, Europe is the highest Usage-based insurance market, compared to other geographies.
European countries such as Italy, have high adoption of Usage-based insurance trend. In 2015, Italy usage-based insurance market accounted for one-third of the global usage-based insurance market revenue. The industry in the country is expected to grow at a CAGR of 33.6% during 2016-2022.
GLOBAL USAGE-BASED INSURANCE MARKET: TOP IMPACTING FACTORS
Lower accident and vehicle theft possibilities
Telematics-based insurance lowers the chances of accident and vehicle theft as it monitors the driving behavior, supplementing the growth of the market. It is capable of detecting the lost or stolen vehicles through GPS in the telematics device connected to the vehicle. These factors are anticipated to increase the demand for telematics-based insurance in the near future.
High telematics installation cost
Usage-based insurance service is completely dependent on telematics device. Telematics installation is a high-technology process and its cost is projected to increase in the coming years. This is anticipated to increase the operating expense of UBI service providers, restraining the market growth. However, smartphone based telematics services are anticipated to gain popularity due to their relatively lower cost.
Technological advancement is projected to fuel the growth of usage-based insurance industry during the forecast period, making the process easier with reduced service rate. Smartphone and hybrid technology based solutions play an important role in driving the market growth. According to the market study, the U.S. household participation in UBI policies increased from 13% in 2013 to 20% in 2015.
USAGE-BASED INSURANCE MARKET: TOP WINNING STRATEGIES
Key market players have implemented various strategies such as partnership, acquisition, and expansion to gain competitive advantage and a stronger base in the market. For instance, prominent players such as Progressive Corporation, Desjardins Group, and Allianz SE have made multiple partnerships and acquisitions to increase their market presence. Other strategies include product differentiation to attract new customers.
The companies profiled in the report are Allianz SE, AXA S.A., Insure The Box Ltd., Progressive Corporation, Allstate Corporation, Desjardins Insurance, Generali group, Mapfre S.A., Metromile, and Aviva plc. Other players in the value chain include Admiral Group Plc., Ageas S.A. /NV, AI Insurance Holdings Pty Ltd., Aioi Nissay Dowa Insurance (ADI), Allstate Corporation, and Box Innovation Group Ltd. (Not profiled in the report).
KEY SEGMENTS OF USAGE BASED INSURANCE MARKET
USAGE BASED INSURANCE MARKET PLAYERS IN VALUE CHAIN
*Other players in the value chain include (profiles not included in the report):