The usage-based insurance market is projected to grow from USD 43.38 billion in 2023 to USD 70.46 billion by 2030, at a CAGR of 7.2%. The key factors driving the usage-based insurance market are consumer willingness to share personal data with UBI insurer companies, the increase in connected cars, and the affordability of the UBI premium compared to traditional insurance.
“Pay-As-You-Drive (PAYD) type is anticipated to witness the highest growth by 2030”
PAYD insurance is also commonly known as “pay less, when drive less”. This UBI policy type provides personalized premiums to the vehicle owner based on actual distance covered by the vehicle rather than fixed annual insurance fees which offers more personalized and cost-effective solution to the customer. The customers only pay only for the driven kilometres by the vehicle. The PAYD type is opted more than other types due to its flexibility for calculating the UBI premiums. For instance, when the vehicle stays in garage for a longer duration for any reason, in PAYD program the vehicle owner get benefit to pay vehicle insurance only for the specific days or month in the year when the vehicle is in use. Many insurer companies are promoting PAYD due to its affordability and offers. For instance, Reliance General Insurance (India) offers to carry forward the unused kilometres to next year benefiting the customers. Hence the flexibility for calculating the premiums and insurer companies promoting the UBI policy is driving the market with highest market during the forecasted period.
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“Embedded Telematics Device is the fastest growing market by 2030”
The Embedded telematics offered by the OEMs is growing gradually in vehicles due to various factors such as increase in safety offerings, increasing the operational efficiency and obeying the regulatory mandate. Also, as the vehicles are becoming connected, the OEMs are offering the telematics device the vehicles which can easily share the vehicle data in real time to monitor the vehicle driving behaviour to calculate the accurate risk assessment and develop the personalized premiums for the vehicle owner. Moreover, the regulatory mandate for eCall systems in all the cars in Europe has significantly driven the market, where all the vehicles sold in Europe are equipped with embedded telematics.
“Europe holds the second largest market share in the UBI market”
Europe holds the second largest market for UBI insurance due regulatory support for protecting personal data & privacy and increase in OE fitted telematics device due to eCall mandate which supports the adoption for UBI policy across Europe. Considering the regulation, “General Data Protection Regulation” (GDPR) acts as the basis for data privacy regulation across Europe, where all the UBI providers needs to adhere to one single regulation with respect to data collection, processing and privacy to offer UBI within the region. Due to this regulation the European consumers are ready to share their personal data with insurer companies for calculating the UBI premiums, which is boosting the adoption for UBI.
Moreover, Italy holds the largest market in Europe with more than 60% of adoption rate. The integration for telematics device and aftermarket device for calculating UBI premium was high due to increase in vehicle theft, which has made Italy a leader in UBI adoption within Europe. Also, Europe is growing shift towards electric vehicles and shared mobility, where the adoption for UBI policy is expected to increase as insurers integrate these evolving trends into their offerings. Hence these factors have made Europe the second largest market for UBI.
Key Players
The UBI market is dominated by globally established players such as Octo Group S.p.A (Italy), Cambridge Telematics (US), Lexis Nexis (US), The Floow (UK), Allianz (Germany), AXA (France), Zurich (Switzerland), Libert Mutual Insurance (US), Allstate Insurance Company (US), and Farmers Insurance (US). These companies adopted new product launches, acquisitions, partnerships, collaborations, and other key strategies to gain traction in the automotive market.
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