Usage Based Insurance For Automotive Market

The increased popularity of telematics and linked automobiles is driving the global usage-based insurance for automotive market

The size of the global market for Usage-based Insurance for Automotive is expected to reach US$ 124.02 billion  by 2027, expanding at a compound annual growth rate (CAGR) of 26%.

Covid-19 Impact:

The covid-19 adversely impacted the way insurance business leaders work. It created unprecedented crisis on the insurance industry thereby hampering the global usage based insurance for automotive market. However, to response and emerge from the impact of the covid-19 business leaders in the global usage based insurance for automotive market adopted various strategies such as centralizing insurance management to boost efficiency, digitization to provide distinctive and safe services, solutions, customer experience management, adopting digital and advanced analytics strategies, and other approaches to engage customer in better services.

This report provides a detailed study of the global usage based insurance for automotive market. The key aspects of the global usage based insurance for automotive market such as forecasts of the key segments, competitive environment, key segments, market dynamics, key players, market dynamics, major challenges, investment opportunities and more such crucial details of the market segmented by regions, and other categories are detailed in the report.

Pay-How-You-Drive (PHYD) sector dominated the market

In terms of revenue, the Pay-How-You-Drive (PHYD) sector dominated the market in 2019, accounting for 60.29 percent of the total. Pay-How-You-Drive (PHYD) is a type of insurance premium that is charged based on the vehicle driver's driving behaviour. This form of insurance keeps track of parameters like how hard you brake, how rapidly you accelerate, and how sharply you turn. Furthermore, clients are taking advantage of this form of insurance coverage to limit reckless driving and embrace safe driving behaviours in order to earn incentives and prizes on their insurance rate.

Meanwhile, the Manage-How-You-Drive (MHYD) category is expected to increase at a CAGR of more than 24.1 percent throughout the projection period. This expansion can be linked to instantaneous driver input regarding his driving style, which allows for real-time insurance premiums. Furthermore, the integration of additional linked services, such as theft insurance plans and vehicle wellness reports, with MHYD packages will boost market development even further. Because of the advantages of mileage-based insurance rates, the Pay-As-You-Drive (PAYD) market is predicted to increase significantly.

OBD-II category led the usage-based insurance for vehicle market in 2019

In terms of revenue, the OBD-II category led the usage-based insurance for vehicle market in 2019, accounting for 50.16 percent of the total. The onboard dongles are inserted into vehicles to collect real-time data about specified incidents. They may evaluate everything from speeding and crashes to vehicle acceleration and braking. Furthermore, since insurers give these dongles, there has been an increase in the usage of these sorts of OBD-II-based dongles.

Meanwhile, the smartphone market is expected to rise at a CAGR of more than 27.0 percent throughout the projection period. Because no external telematics device is required for car tracking, the use of this technology has skyrocketed. The smartphone allows insurance companies to monitor and track the driver's driving habits. Customers and insurers benefit since they do not have to invest in the telematics device necessary for usage-based insurance for automobiles. Furthermore, insurance firms are collaborating with software suppliers to give smartphone-based telematics insurance.

Passenger Car Category Led the Market in 2019

In terms of revenue, the passenger car category led the market in 2019 with an 88.04 percent share. This increase can be ascribed to growing sales of passenger automobiles equipped with a pre-installed telematics system. The telematics device provides real-time information on the health, distance travelled, and driving behaviours of the vehicle. Furthermore, passenger car drivers can use telematics systems to improve driving behaviours, resulting in lower insurance rates and insurance incentives for safe driving.

Meanwhile, the commercial vehicle telematics market is expected to grow at a significant CAGR of more than 18.1 percent throughout the projection period. Because of the considerable presence of commercial fleets, the category is expected to acquire traction quickly. Commercial fleet owners are taking advantage of the advantages of usage-based insurance due to decreased insurance premium rates.

North America Accounted for Highest Market Share

North America led the market in 2019, accounting for 34.94 percent of total sales. The existence of important businesses operating in the region, including as Progressive Corporation, Allstate Corporation, and State Farm Automobile Mutual Insurance Company, can be ascribed to this supremacy. Furthermore, technical developments and a high demand for linked services promote regional market expansion. Furthermore, increased adoption of mobility as a service, as well as collaborations between telematics and insurance firms, are opening up new opportunities for industry growth.

From 2020 to 2028, Asia Pacific is predicted to grow at a significant CAGR of more than 25.2 percent. Countries such as China and Japan are expected to open up new business prospects in the area. Furthermore, the Asia Pacific market is still in its infancy due to problems such as a lack of data protection and customer awareness. The spread of smartphone technology and mobile connection, on the other hand, is expected to boost usage-based insurance for the vehicle sector.

The reduction in insurance premiums and risk-related expenses is expected to fuel the expansion of the automobile usage-based insurance industry

The factors like increased adoption of usage-based insurance among end-users due to characteristics such as precise and rapid data gathering techniques and flexible insurance is expected to buffer the expansion of the usage-based insurance for automobile market.

Owing to advantages such as enhanced customer loyalty, reduced claims cost, reduction in frauds, stolen vehicle recovery, improved pricing accuracy, lower acquisition costs, increased renewal rate, the usage-based insurance for vehicle is experiencing rapid adoption, thus fostering remarkable progress in global usage-based insurance for vehicle market.

The usage-based insurance for vehicle market is predicted to increase at a pace of 22.30% from 2021 to 2028, with a market value of USD 14.186 billion by 2028.

Usage-based insurance is a form of insurance coverage in which the premium is directly related to the vehicle's use.

On the other side, uncertainty in rules and legislative environments is expected to impede the expansion of the usage-based insurance for automobile market throughout the forecast period.

Furthermore, the evolving car usage-based insurance ecosystem will create further potential prospects for the expansion of the automotive usage-based insurance industry in the future years. However, worries about data privacy and a lack of standardised infrastructure may stymie the spread of usage-based insurance in the vehicle industry in the near future.

The major players in the global usage based insurance for automotive market are Danlaw, Cambridge Mobile Telematics, IMS, Insure The Box, TomTomm, Zubie, Mapfre S.A, Vodafone Automotive, Metromile, Octo, Generali, Progressive, UnipolSai¸ Desjardins Group, Nationwide, Liberty Mutual, Allianz, State Farm, Sierra Wireless, Allstate, and AXA among others.

Latest Innovations in the Global Usage-Based Insurance for Automotive Market:

State Farm and Ford teamed up to introduce usage-based insurance called Drive Safe & Save to the new customers.

Usage-based Insurance for Automotive Market Scope

Key Segments of Global Usage-Based Insurance For Automotive Market

Type Overview (USD Billion)

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

Technology Overview, (USD Billion)

• OBD II
• Black Box
• Smartphones
• Others

Vehicle Type Overview, (USD Billion)

• Passenger Auto
• Commercial Auto

Regional Overview,(USD Billion)

North America

• U.S
• Canada

Europe

• Germany
• France
• UK
• Rest of Europe

Asia Pacific

• China
• India
• Japan
• Rest of Asia Pacific

South America

• Mexico
• Brazil
• Rest of South America

Middle East and South Africa