Automotive Usage-Based Insurance (UBI) Market Analysis Europe, North America, APAC, Middle East and Africa, South America - US, Canada, Germany, UK, France - Size and Forecast 2024-2028

Automotive Usage-Based Insurance (UBI) Market Forecast 2024-2028 

The Automotive Usage-Based Insurance (UBI) Market size is forecast to increase by USD 67.51 billion, at a CAGR of 25.1% between 2023 and 2028. The market is rapidly expanding due to various factors, including the implementation of flexible pricing models in this market, increased government regulations mandating insurance coverage, and the favorable technological landscape within the automotive sector. These dynamics have created an environment conducive to innovation and advancement, leading to significant growth in the industry.

What will be the Size of the Market During the Forecast Period?

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Market Dynamic and Customer Landscape

The market is driven by the automotive industry's embrace of telematic devices and connected car technology. With an increasing focus on consumer driving behaviour, Usage-Based Insurance offers personalized insurance premiums based on actual vehicle usage. However, challenges such as data security concerns, fraudulent claims, and regulatory compliance pose significant hurdles. Trends indicate a shift towards smartphone-based and hybrid usage-based insurance solutions, catering to both passenger and commercial vehicles. As the industry evolves, overcoming these challenges while leveraging advanced technology will be crucial for sustained growth in the market. Our researchers analyzed the data with 2023 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.

Key Market Driver

Increasing government regulations for insurance coverage is notably driving the market growth. In most countries worldwide, it is mandatory for a vehicle that runs on public roads to have motor insurance. In some countries, such as India, third-party motor insurance is compulsory for vehicles that run on public roads. Anyone who owns or operates a vehicle in Maine, US, must carry at least the minimum amount of insurance required by the law. The law requires uninsured/underinsured motorist coverage at a minimum of USD 50,000 per person or USD 100,000 per accident.

Also, the Insurance Regulatory and Development Authority of India (IRDAI) seems to support usage-based auto insurance. Major auto insurance providers are likely to start to offer these kinds of plans in the future, as the nation's top insurance authority encourages insurers. Furthermore, with insurance becoming mandatory for citizens, the market is expected to experience significant growth during the forecast period.

Significant Market Trends

The growing application of automotive UBI in accident investigation and recovery of stolen vehicles is an emerging trend shaping market growth. The tracking and telemetry information gathered by usage-based insurance programs can also be applied to accident investigations. When GPS data is available before an event, it can make forensic analysis of the vehicle involved in the collision much simpler. Details like how quickly the driver was driving and to what extent they applied brake can all aid in accident investigations to determine which party was more at fault. The gathering of this information may also aid in identifying false claims and preventing payouts.

However, many UBI systems depend on tracking devices that are installed in cars, when a car is reported stolen, customers can get in touch with their insurance and ask them to send them the GPS tracking data for the vehicle. This can assist law enforcement and drivers in locating the stolen car precisely. Thus, the application of automotive UBI in accident investigation and recovery of stolen vehicles is expected to positively impact the growth of the market during the forecast period.

Major Market Challenge

The high complexity of automotive UBI solutions is a significant challenge hindering 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 market growth.

Moreover, 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 will hinder the growth of the market during the forecast period.

Market Customer Landscape

The market forecasting 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 market growth analysis strategies.

 Customer Landscape

Who are the Major Market Companies?

Companies 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.

AXA Group - The company offers automotive usage based insurance namely Pay As You Grab for private hire car drivers in partnership with GRAB.

The market research and growth report also includes detailed analyses of the competitive landscape of the market and information about 20 market companies, including:

• ACKO General Insurance Ltd.
• Allianz SE
• Aviva insurance Ltd.
• Desjardins Group
• Discovery Ltd.
• Direct Line Insurance Group Plc
• GEICO
• HDFC Bank Ltd.
• Lemonade Inc.
• Liberty Mutual Insurance Co.
• Mile Auto Inc.
• Nationwide Mutual Insurance Co.
• Root Inc.
• The Allstate Corp.
• The Progressive Corp.
• The Travelers Co. Inc.
• USAA
• Verizon Communications Inc.
• Zurich Insurance Co. Ltd.

Qualitative and quantitative analysis of companies 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 companies as pure play, category-focused, industry-focused, and diversified; it is quantitatively analyzed to categorize companies as dominant, leading, strong, tentative, and weak.

What is the Largest-Growing Segment in the Market?

The market is witnessing significant growth driven by advancements in connected cars and car telematics technology. This has led to the development of innovative models by insurance companies, leveraging telematics data and location tracking capabilities. State regulations are shaping the landscape of UBI, ensuring compliance and consumer protection within the automotive UBI ecosystem. While traditional insurance remains prevalent, the rise of connected car services and mobility-as-a-service platforms is transforming the industry. UBI solutions cater to various vehicle types, from passenger cars to commercial fleets, offering benefits such as vehicle recovery and personalized premiums based on factors like fuel consumption and driving behavior. However, challenges persist, particularly concerning data security issues and the integration of smartphone-based and hybrid UBI systems. Overcoming these challenges will be essential for the continued evolution and expansion of the market.

The embedded UBI segment is estimated to witness significant growth 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. 

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The embedded UBI was the largest segment and was valued at USD 10.10 billion in 2018. Additionally, 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, it is expected that 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 UBI solutions in the automotive market will witness a continuous rise. This, in turn, is expected to drive the growth of the market during the forecast period.

Which are the Key Regions for the Market?

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Europe is estimated to contribute 34% to the growth of the global market during the forecast period. Technavio’s analysts have elaborately explained the regional trends and drivers that shape the market during the forecast period. Europe dominates the automotive 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.

However, Europe is expected to witness slower growth than other regions owing to the preference for alternative transport and smartphone-enabled GPS navigation in the region. Additionally, luxury electric cars are witnessing high adoption in Europe. The region is expected to witness a high demand for luxury electric cars and create a new avenue for embedded UBI solutions during the forecast period, accelerating the growth momentum of the market in the region during the forecast period.

Segment Overview

The market report forecasts market growth by revenue at global, regional & country levels and provides an analysis of the latest trends and growth opportunities from 2018 to 2028. 

• Application Outlook 
  • Embedded UBI
  • App-based UBI

• Pricing Scheme Outlook 
  • PHYD
  • PAYD
  • MHYD
  Region Outlook
  • North America
    • The U.S.
    • Canada
  • South America
    • Chile
    • Brazil
    • Argentina 
  • Europe
    • U.K.
    • Germany
    • France
    • Rest of Europe
  • APAC
    • China
    • India
  • Middle East & Africa
    • Saudi Arabia
    • South Africa
    • Rest of the Middle East & Africa

Market Analyst Overview

The market is experiencing dynamic growth, driven by advancements in telematics technology and the proliferation of on-road vehicles. Insurance businesses are leveraging machine learning and predictive modeling technologies, partnering with data platform and analytics firms, and cloud service providers to deliver innovative UBI solutions. Data privacy regulations and concerns are addressed to protect policyholders' privacy while enabling OEMs to integrate UBI features into vehicles. Various UBI programs, including smartphone-based UBI, hybrid-based UBI, and black-box-based models, cater to diverse driver profiles and vehicle types, from new to used, light-duty to heavy-duty vehicles. These data-driven solutions offer financial protection for policyholders and businesses against uncertain events, fostering a more personalized and efficient industry landscape.

Moreover, the market is rapidly evolving, with key players including OEMs (Original Equipment Manufacturers), telematics companies, and big data companies driving innovation. UBI programs utilize various technologies such as black boxes, smartphone apps, and hybrid models to monitor driver behaviour, promoting safety and offering tailored the solutions like pay-as-you-drive (PAYD), pay-how-you-drive (PHYD), and manage-how-you-drive (MHYD). These programs cater to diverse vehicle types, from new to used, and cover a wide range of vehicles, including light-duty and heavy-duty vehicles. However, privacy concerns persist, prompting the exploration of blockchain technology for secure data management. Smartphone-centric solutions are gaining traction, offering convenience and flexibility for policyholders while enabling insurers to better assess risk and manage assets.

Market Scope
Report Coverage	Details
Page number	167
Base year	2023
Historic period	2018-2022
Forecast period	2024-2028
Growth momentum & CAGR	Accelerate at a CAGR of 25.1%
Market Growth 2024-2028	USD 67.51 billion
Market structure	Fragmented
YoY growth 2023-2024(%)	22.69
Regional analysis	Europe, North America, APAC, Middle East and Africa, and South America
Performing market contribution	Europe at 34%
Key countries	US, Canada, Germany, UK, and France
Competitive landscape	Leading Companies, Market Positioning of Companies, Competitive Strategies, and Industry Risks
Key companies profiled	AXA Group, ACKO General Insurance Ltd., Allianz SE, Aviva insurance Ltd., Desjardins Group, Discovery Ltd., Direct Line Insurance Group Plc, GEICO, HDFC Bank Ltd., Lemonade Inc., Liberty Mutual Insurance Co., Mile Auto Inc., Nationwide Mutual Insurance Co., Root Inc., The Allstate Corp., The Progressive Corp., The Travelers Co. Inc., USAA, Verizon Communications Inc., and Zurich Insurance Co. Ltd.
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, Market condition analysis for the forecast period.
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.

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What are the Key Data Covered in this Market Research Report?

• CAGR of the market during the forecast period
• Detailed information on factors that will drive the market growth and forecasting between 2024 and 2028
• Precise estimation of the market  size and its contribution of the market in focus to the parent market
• Accurate predictions about upcoming market growth and trends and changes in consumer behaviour
• Growth of the market industry across Europe, North America, APAC, Middle East and Africa, and South America
• Thorough analysis of the market’s competitive landscape and detailed information about companies
• Comprehensive analysis of factors that will challenge the growth of market companies

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