The global automotive usage-based insurance market is forecast to grow at a compound annual growth rate (CAGR) of more than 24% during the forecast period from 2021-2027.

Automobile Usage-Based Insurance provides coverage based on the actual miles driven and other driving variables, including location, speed, and driving behavior. Using telematics devices, insurers collect driving data for quality control, claims assessment, and even accident reconstruction. The data is analyzed by insurance companies for pricing insurance policies more accurately. 

Nowadays, people buy insurance via the internet and their smartphones. Technological advancements have made the insurance ecosystem simple, convenient, and accessible. Telematics or usage-based car insurance will enable consumers to move from generalization to personalization. UBI is the most popular use case of big data in the insurance industry. The market has been increasing rapidly in recent years, especially in the United States and Europe. The UBI products provide the insurance company with a better service quality by accurately segmenting risks and analyzing driving behaviors. In addition, UBI products offer a wide range of value-added services. The primary reason for insurers to introduce UBI is to establish realistic and accurate means of determining the risks to which the client is subject and to be able to charge a premium that reflects on that risk. Several markets currently offer voluntary car-telematics systems, but regulators in many countries want to make it mandatory in specific circumstances.

Factors Affecting the Market

• The penetration of usage-based insurance due to its benefits, such as lower insurance premiums than the standard one, and the high adoption of connected car services are substantial contributors to its growth. The automotive industry has seen a rise in usage-based insurance. 
• Increasing sales of pre-equipped telematics vehicles and government regulations for vehicle safety will drive market growth. 
• A low level of transparency in data collection techniques, privacy, and theft concerns, are expected to hinder the market growth. Also, a poor internet connection may affect real-time monitoring systems, and therefore the discount on premiums offered by insurance companies. In addition, challenges such as lack of personal integrity and design complexity may negatively impact market growth.

Regional Overview

North America held dominance in the market in 2020. Several key players dominate the insurance market in the region, including Progressive Corporation, Allstate Corporation, and State Farm Automobile Mutual Insurance Company. Moreover, technological advancements and increasing demand for interconnected services are also driving the regional market growth. Increasing penetration of telematics along with insurance company partnerships are also generating opportunities for growth in the market.

Impact Analysis of COVID-19

Automotive companies play an essential role in the development of the global economy. In 2020, COVID-19 had a tremendous effect on the automotive supply chain in the second and third quarters, negatively affecting new vehicle sales.

Usage-based insurance in the automotive industry is rapidly recapturing the levels it enjoyed before COVID-19 positive growth is forecast in the forecast period, driven by economic growth in many developing nations. A frequent suspension of public transit, combined with the contagious nature of the virus, drove demand for passenger cars, which in turn created a demand for automotive insurance.

Key Players

The leading companies profiled in the global automotive usage-based insurance market are:

• Allstate Insurance Company
• Allianz SE
• Assicurazioni Generali S.P.A.
• Sierra Wireless Inc.
• Octo Telematics
• Cambridge Mobile Telematics
• TomTom International N.V.
• Vodafone Automotive SpA
• Metromile, Inc.
• AXA S.A.
• Other Prominent Players

Scope of the Market

The global automotive usage-based insurance market segmentation focuses on Package Type, Technology Type, Vehicle Type, and Region.

Segmentation based on Package Type

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

Segmentation based on Technological Type

• On-Board Diagnostics (OBD)
• Smartphone 
• Black box
• Embedded telematics

Segmentation based on Vehicle Type

• Passenger Vehicles 
• Commercial Vehicles

Segmentation based on Region

• North America
• The U.S.
• Canada
• Mexico
• Europe
• Western Europe
• The UK
• Germany
• France
• Italy
• Spain
• Rest of Western Europe
• Eastern Europe
• Poland
• Russia
• Rest of Eastern Europe
• Asia Pacific
• China
• India
• Japan
• Australia & New Zealand
• ASEAN
• Rest of Asia Pacific
• Middle East & Africa (MEA)
• UAE
• Saudi Arabia
• South Africa
• Rest of MEA
• South America
• Brazil
• Argentina
• Rest of South America