Global Automotive Usage Based Insurance Market Report and Forecast 2024-2032

Global Automotive Usage Based Insurance Market Outlook

The global automotive usage based insurance market is expected to grow at a CAGR of 21.4% during the period 2024-2032. North America and Europe are expected to be key markets.

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Global Market Likely to be Driven by Benefits of Usage Based Insurance, Including Lower Premiums and Improved Driving

Usage based insurance (UBI) is a type of insurance where the premium payable is directly linked to the use of the insured product or service. In the automotive insurance industry, usage based insurance is also known as Telematics insurance. Usage based insurance is quite prevalent for vehicles in developed countries. In a usage based insurance program, the automobile insurance company would keep a track of the way one drives; if the driving gets a good score, then it could lead to lower rates of car insurance. Usage based insurance programs usually assess acceleration, speeding and harsh braking, and also consider mileage and the time of day of the drive. Driving is scored, and the driver is also given tips to better the score. The better the driving, the better the auto insurance rates. Usage based insurance programs gather vehicle telematics data with the help of cellular, GPS or other technologies. Telematics devices used in usage based insurance (UBI) include smartphones with mobile apps, 12V dongles, Bluetooth connections, black boxes, GPS devices, and on-board sensors. The data so gathered include hard braking, acceleration, miles driven, speed, hard cornering, time of day, use of phone while driving, etc.  Usage based insurance is gaining recognition and acceptance, with a significant percentage of drivers choosing a telematics option when offered.

The different types of usage based insurance for automobiles include:

Pay as You Drive (PAYD) – Insurance premium is charged on the basis of the amount of driving done.

Pay How You Drive (PHYD) – Insurance premium is charged on the basis of the driving skills of the driver. Parameters include acceleration, hard braking, hard turning, etc.

Pay as You Go (PAYG) – This method warrants the installation of a Telematics device, and could a combination of the aforementioned points.

Distance-based Insurance – Based on the number of miles travelled by the automobile during the policy period.

Benefits of Usage Based Insurance Expected to Boost the Global Automotive Usage Based Insurance Market

Benefits of usage based insurance (UBI) include improved driving, possibly lower premiums (safer and better driving would lead to lower premiums), possible reduction in road accidents, enhanced road safety, and better insurance products (with the help of the right kind of data, insurance companies may devise novel, improved, and beneficial need-based insurance policies).

Growing Use of Smartphones, Opportunities to Strengthen Company-Client Relationships Expected to Drive Market Growth

The increasing popularity of smartphones has provided insurance providers access to means to enhance and strengthen their relationships with clients. Today, insurance providers can leverage mobile telematics apps to offer unique incentives to drivers who exhibit safe on-road habits. Gestures such as congratulating a driver through a smartphone message on completing a long road trip safely and efficiently, or offering a bonus, rebate or reward for a demonstrating an on-road skillset are likely to strengthen company-client relationship.

Companies Offering Innovative and Data-driven Services Likely to Stimulate Global Automotive Usage Based Insurance Market

Leading companies are coming together to offer usage based insurance to new vehicle owners. For example, in 2023, State Farm® and Ford announced the launch of Drive Safe & Save™ Connected Car for customers with eligible connected Ford or Lincoln vehicles, to benefit from usage based insurance.

In 2023, Otonomo and Audi AG came together to focus on innovative, data-driven services. Audi would provide Otonomo with GDPR-compliant access to Audi car data, quickening the development of advanced mobility solutions, from pay-as-you-drive (data could be used for usage based insurance; elements included mileage readings and parking time) and insurance services to general vehicle status, first notification of loss, accident reporting, etc.

Market Segmentation

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By package, the market is segmented into:

• Pay-As-You-Drive (PAYD)
• Pay-How-You-Drive (PHYD)
• Manage-How-You-Drive (MHYD)

By vehicle type, the market is divided into:

• Passenger Vehicles
• Light Commercial Vehicle
• Heavy Commercial Vehicle

By technology, the market is classified into:

• Black Box
• Smartphone
• Embedded Telematics
• On-Board Diagnostics (OBD)
• Others

By region, the market is segmented into:

• North America
• Europe
• Asia Pacific
• Latin America
• Middle East and Africa

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Key Industry Players in the Global Automotive Usage Based Insurance Market

The report presents a detailed analysis of the following key players in the market, looking into their capacity, and latest developments like capacity expansions, plant turnarounds, and mergers and acquisitions:

• Allianz SE
• TomTom International B.V.
• Vodafone Automotive S.p.A
• Assicurazioni Generali S.p.A.
• Travelers Indemnity Company
• Esurance Insurance Services, Inc.
• Trak Global Group
• AXA S.A.
• Others

The EMR report gives an in-depth insight into the industry by providing a SWOT analysis as well as an analysis of Porter’s Five Forces model.

Key Highlights of the Report