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The automotive usage-based insurance market is estimated to grow at a CAGR of 26.79% between 2022 and 2027. The size of the market is forecast to increase by USD 69,980.26 million. The growth of the market depends on several factors, including a lower number of accidents and vehicle theft possibilities, flexible pricing schemes, and growth in smartphone-enabled programs and their usage.
This report extensively covers market segmentation by application (embedded UBI and app-based UBI), pricing scheme (PHYD, PAYD, and MHYD), and geography (Europe, North America, APAC, Middle East and Africa, and South America). It also includes an in-depth analysis of drivers, trends, and challenges. Furthermore, the report includes historic market data from 2017 to 2021.
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Our researchers analyzed the data with 2022 as the base year, along with the key drivers, trends, and challenges. A holistic analysis of drivers will help companies refine their marketing strategies to gain a competitive advantage.
The lower number of accidents and vehicle theft possibilities are notably driving the market growth. Auto insurers have introduced one of the latest innovations that interlink driving behaviour with the premium rates of auto insurance. Linking insurance premiums more closely to the actual individual vehicle or fleet performance allows insurers to price the premiums more accurately. It also gives users the ability to control their premium costs by adopting safer driving habits that reduce accidents.
The use of telematics in vehicles helps auto insurers to estimate accident damages accurately. It also helps in reducing fraud as telematics allows the analysis of driving data like hard braking, speed, and time during accidents. Such additional data can be used by auto insurers to refine or differentiate UBI products. The additionally offered telematics-based UBI programs help in lowering the costs related to accidents and vehicle thefts by improving the accident response time, enabling the tracking and recovery of stolen vehicles, and monitoring driver safety. Such benefits will significantly help in driving market growth.
Big data platforms provided by connected cars to push further developments in UBI is the primary trend in the market. Rising connectivity solutions in the automotive industry and the availability of real-time data give a huge opportunity for auto OEMs to develop efficient product offerings. The collection of real-time data is expected to grow further owing to the growing adoption of connected cars.
Telematic devices generate data such as date, time, speed, acceleration, deceleration, cumulative mileage, fuel consumption, and navigation details, which range in size from approximately 6MB to 20 MB annually per customer. Hence, the total data will be more than one terabyte per year for 100,000 vehicles. This crucial data can be used by many stakeholders to increase their revenue streams. For instance, insurance providers can calculate the optimum premium for each customer as per his/her driving behaviour, which, in turn, can be derived from his/her real-time vehicle usage data. This will allow insurance providers to create long-term and more profitable customer relationships.
The high installation cost of telematics devices is the major challenge impeding the market growth. Automotive UBI solutions are very complex as they require extensive data management and analytics capabilities. In addition, embedded UBI solutions require an external device to be integrated into the vehicle, the cost of which cannot be passed on to the customers. Insurers struggle to design a system that is best suited to the needs of end-users. Also, as telematics is a highly technical process, its cost is expected to increase during the forecast period, which will increase the operating cost of automotive UBI and restrain the market growth.
The effective penetration of automotive UBI would require data pooling. However, leading players keep their data confidential and do not share it with other players, thereby restricting data availability. Such limitations impel new vendors to run pilot programs for primary data collection and incorporate the findings into their UBI product designs. This complexity increases the time of new product development and hinders the growth of the global automotive UBI market.
The report includes the adoption lifecycle of the market, covering from the innovator’s stage to the laggard’s stage. It focuses on adoption rates in different regions based on penetration. Furthermore, the report also includes key purchase criteria and drivers of price sensitivity to help companies evaluate and develop their growth strategies.
Global Automotive Usage-based Insurance Market Customer Landscape
Vendors are implementing various strategies, such as strategic alliances, partnerships, mergers and acquisitions, geographical expansion, and product/service launches, to enhance their presence in the market.
TomTom International BV - The company offers automotive usage-based insurance in case of accidents and third-party medical coverage. Under this segment, the company is involved in offering vehicle and driving data business, thus delivering enterprise solutions to over 350 customers including mobility operators, insurers, and governments.
The report also includes detailed analyses of the competitive landscape of the market and information about 15 market vendors, including:
Qualitative and quantitative analysis of vendors has been conducted to help clients understand the wider business environment as well as the strengths and weaknesses of key market players. Data is qualitatively analyzed to categorize vendors as pure play, category-focused, industry-focused, and diversified; it is quantitatively analyzed to categorize vendors as dominant, leading, strong, tentative, and weak.
The market share growth of the embedded UBI segment will be significant during the forecast period. Embedded UBI solutions use external devices fitted into vehicles' onboard diagnostics (OBD) to collect data about driving behavior. The data is transmitted to the insurer for optimum premium pricing. As the requirement of an external device posed a challenge for the adoption of embedded UBI, app-based UBI saw huge adoption in the last 2-3 years. However, the adoption of the Linux-based embedded application framework increased the flexibility of the system and led to its wider in-vehicle applications. This system allows the collection of data directly through the vehicle-embedded system instead of using an external device. Hence, embedded UBI will witness stronger growth than app-based UBI solutions during the forecast period.
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The embedded UBI segment was valued at USD 5,656.04 million in 2017 and continue to grow until 2021. Governments around the world have established various committees to ensure safety during road transportation. Russia, Brazil, and many countries in Europe have mandated telematics services, such as emergency calls and stolen vehicle assistance, in vehicles. This trend will likely be followed by developing nations like India and China during the forecast period, thereby increasing the market share of embedded solutions. Additionally, we expect higher adoption of embedded solutions from luxury OEMs as they are ready to invest heavily in differentiating their products in the market. Therefore, the adoption of embedded solutions in the automotive UBI market will witness a continuous rise during the forecast period.
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Europe is projected to contribute 44% by 2027. Technavio’s analysts have elaborately explained the regional trends and drivers that shape the market during the forecast period.
Europe dominates the automotive UBI market. Factors such as pricing play an important role in the adoption of automotive UBI in this region. The largest distribution channel in Europe is through price comparison websites. These websites allow users to compare and choose among the various offerings provided by insurers. Additionally, customers in Europe make decisions purely based on pricing owing to less product differentiation among insurers. Continuous advancements in technologies and services have contributed to the dynamism of the persistently developing in-vehicle telematics systems in the market. The market in Europe responded positively to the developments in telematics systems and witnessed high adoption in the last few years.
In 2020, the COVID-19 pandemic drastically hampered Europe's economy. Though the relaxation of lockdown legislation in 2021 as a result of widespread vaccination in Europe assisted in resuming travel activities throughout the region and led to an increase in demand for automotive UBI??????.
The report forecasts market growth by revenue at global, regional & country levels and provides an analysis of the latest trends and growth opportunities from 2017 to 2027. The market has been segmented by application (embedded UBI and app-based UBI), pricing scheme (PHYD, PAYD, and MHYD), and geography (Europe, North America, APAC, Middle East and Africa, and South America).
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Automotive Usage-based Insurance Market Scope |
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Report Coverage |
Details |
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Page number |
167 |
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Base year |
2022 |
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Historic period |
2017-2021 |
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Forecast period |
2023-2027 |
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Growth momentum & CAGR |
Accelerate at a CAGR of 26.79% |
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Market growth 2023-2027 |
USD 69,980.26 million |
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Market structure |
Fragmented |
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YoY growth (%) |
25.63 |
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Regional analysis |
Europe, North America, APAC, Middle East and Africa, and South America |
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Performing market contribution |
Europe at 44% |
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Key countries |
US, Canada, Germany, UK, and France |
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Competitive landscape |
Leading Vendors, Market Positioning of Vendors, Competitive Strategies, and Industry Risks |
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Key companies profiled |
Allianz SE, AXA Group, Desjardins Group, Discovery Ltd., Kotak Mahindra General Insurance Co. Ltd., Liberty Mutual Holding Co. Inc., Metlife Inc., Navi Technologies Ltd, Sierra Wireless Inc., The Allstate Corp., The Progressive Corp., TomTom International BV, Track Global Group Ltd., Verizon Communications Inc., Vodafone Group Plc, Aviva Plc, Howden Broking Group Ltd., Direct Line Insurance Group Plc, OCTO Telematics S.p.A, and The Travelers Co. Inc. |
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Market dynamics |
Parent market analysis, Market growth inducers and obstacles, Fast-growing and slow-growing segment analysis, COVID-19 impact and recovery analysis and future consumer dynamics, and market condition analysis for the forecast period. |
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Customization purview |
If our report has not included the data that you are looking for, you can reach out to our analysts and get segments customized. |
We can help! Our analysts can customize this report to meet your requirements. Get in touch
1 Executive Summary
2 Market Landscape
3 Market Sizing
4 Historic Market Size
5 Five Forces Analysis
6 Market Segmentation by Application
7 Market Segmentation by Pricing Scheme
8 Customer Landscape
9 Geographic Landscape
10 Drivers, Challenges, and Trends
11 Vendor Landscape
12 Vendor Analysis
13 Appendix
Research Framework
Technavio presents a detailed picture of the market by way of study, synthesis, and summation of data from multiple sources. The analysts have presented the various facets of the market with a particular focus on identifying the key industry influencers. The data thus presented is comprehensive, reliable, and the result of extensive research, both primary and secondary.
INFORMATION SOURCES
Primary sources
Secondary sources
DATA ANALYSIS
Data Synthesis
Data Validation
REPORT WRITING
Qualitative
Quantitative
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