The automotive usage based insurance market size is projected to reach US$ 240.8 billion by 2031 from US$ 52.1 billion in 2023. The market is expected to register a CAGR of 21.1% in 2023–2031. Advanced telematics technologies to accentuate the demand for UBI and a wide variety of insurance premiums are among the key factors fueling the automotive usage based insurance market.
Automotive Usage Based Insurance Market Analysis
With the constant evolvement of the telematics industry and its rapid adoption within the automotive sector, new partnerships are developing amongst insurers, automotive manufacturers, device OEMs, and telematics solution providers. These partnerships are aimed at taking advantage of the emerging data-driven technology. The young population most commonly adopts automotive usage based insurance as they are more comfortable with technology and open to benefit from lower premiums. In Italy and US markets, UBI is aimed at a diverse range of drivers. Furthermore, awareness has been a hurdle to growth particularly in the UK market, where UBI has been aimed chiefly at the fleet market as well as young drivers. However, with the increasingly rewarding programs introduced by the UBI players, the market is witnessing immense traction. With the increasing growth in connected cars and the ADAS industry, it is expected that all new cars will be equipped with pre-installed telematics devices in the near future. This growth is expected to provide a boost to the automotive usage based insurance market.
Automotive Usage Based Insurance Market Overview
In the current automotive insurance industry, the UBI or telematics insurance is at a nascent stage, as very few countries have adopted the technology heavily. Automotive insurance companies are increasingly partnering with telematics companies to expand their telematics insurance or UBI segment in the current market scenario and also for the future. Additionally, several companies operating in the global automotive usage based insurance market are constantly taking initiatives to attract consumers with various attractive policies and technologies. The market is highly fragmented as the industry is captured by several well-established companies as well as emerging players across the globe. From the investment scenario, the insurance companies and the telematics companies operating in developing countries, as well as developed countries, are scoring significant investments, which is helping the market to witness the upswing in recent times. The governments of several countries are simplifying their insurance legislation, which is another factor driving the market.
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Automotive Usage Based Insurance Market: Strategic Insights
Market Size Value in US$ 19.64 Billion in 2019 Market Size Value by US$ 124.02 Billion by 2027 Growth rate CAGR of 26.0% from 2020-2027 Forecast Period 2020-2027 Base Year 2020
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Automotive Usage Based Insurance Market: Strategic Insights
| Market Size Value in | US$ 19.64 Billion in 2019 |
| Market Size Value by | US$ 124.02 Billion by 2027 |
| Growth rate | CAGR of 26.0% from 2020-2027 |
| Forecast Period | 2020-2027 |
| Base Year | 2020 |
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Automotive Usage Based Insurance Market Drivers and Opportunities
Adoption of Mobility-as-a-Service (MaaS)
Since the past few years, consumer behavior towards intercity and intracity transit has transformed to a newer level. A significant percentage of travelers across the globe are no longer willing to drive their vehicles with the objective of avoiding traffic. This has given rise to various other transit practices, such as car sharing and ride-hailing, in developed countries and developing countries. These practices are known as mobility as a service, as the consumer avails the vehicle and the driver from a third-party service provider. Mobility-as-a-Service aims to provide the consumer end-to-end transportation with the use of different modes of transportation, thereby, making substantial use of the existing transportation infrastructure in an area. The increasing traction of MaaS among consumers is leading third-party service providers to procure an increased count of vehicles so as to enhance the customer experience. This factor is also increasing the number of service providers across the globe; some of the prominent mobility-as-a-service providers are Uber, Lyft, Zipcar, Car2go, Beeline Singapore, UbiGo AB, and Smile Mobility, among others.
Increasing Partnerships among Telematics Companies and Insurance Companies
The automotive usage based insurance market is maturing significanlty over the years in the countries, namely the US, Italy, and the UK. The insurance companies offering telematics insurance are constantly leveraging various factors to enhance the solutions and deliver their customers with better schemes. One of the significant trends in the global automotive usage based insurance market is the raising number of partnerships among telematics and insurance companies. These partnerships are expanding the usage based insurance ecosystems in various economies, and the same trend is projected to increase the market size in the coming years. Some of the significant partnerships among the insurance companies and telematics companies are:
- In November 2022, Ford partnered with CerebrumX Lab Inc., an AI-led automotive data services and management platform. This partnership aimed at incorporating Ford connective vehicle data as a part of its usage-based insurance initiative for insurers.
- In November 2022, Wejo Group Limited signed an agreement with Ford Motor Company. This agreement aimed at expanding end-to-end insurance offerings to consumers across the US.
- In February 2022, Ford partnered with State Farm company. This partnership aimed at the development of usage-based insurance products for Ford and Lincoln vehicle owners with eligible connected vehicles.
Apart from the partnerships mentioned above, several other insurance players, telematics companies, and automotive OEMs across the globe are partnering increasingly to bolster the market for UBI. This practice of increasing partnerships in the automotive usage based insurance market ecosystem is anticipated to help the automotive usage based insurance market to soar over the next couple of years. Additionally, telematics companies are interested in the automotive industry in developing regions across the globe, which is also fueling up the revenue generation stream of the global automotive usage based insurance market.
Automotive Usage Based Insurance Market Report Segmentation Analysis
Key segments that contributed to the derivation of the automotive usage based insurance market analysis are technology fitted and policy type.
- Based on technology fitted, the automotive usage based insurance market has been divided into smartphones, black box, dongles, and others. The dongles segment held a larger market share in 2023.
- Based on the policy type, the automotive usage based insurance market has been divided into pay-as-you-drive (PAYD) and pay-how-you-drive (PHYD). The PHYD segment held a larger market share in 2023.
Automotive Usage Based Insurance Market Share Analysis by Geography
The geographic scope of the automotive usage based insurance market report is mainly divided into five regions: North America, Europe, Asia Pacific, Middle East and Africa, and South America.
North America has dominated the automotive usage based insurance market in 2023. The North America region includes the US, Canada, and Mexico. The dominance of North America in the global automotive usage based insurance market is owing to the fact that the country has presence of a large number of automotive OEMs, telematics, and insurance companies. Additionally, the trend of adoption of newer technologies and solutions is also high in the country, which has pushed the residents to opt for telematics insurance. Moreover, the region is one of the precursors of mobility-as-a-service across the globe, and the MaaS market has propelled extensively over the years in the region and is constantly witnessing upward trends.
Further, owing to the higher disposable income among the individuals, the pattern of procurement of new vehicles is high in the country. Pertaining to the rise in the number of vehicles, several associated technologies and solutions are also increasing rapidly in the US. These factors have positively influenced the automotive usage based insurance market growth in the US.
Automotive Usage Based Insurance Market Report Scope
Automotive Usage Based Insurance Market News and Recent Developments
The automotive usage based insurance market is evaluated by gathering qualitative and quantitative data post primary and secondary research, which includes important corporate publications, association data, and databases. The following is a list of developments in the market for automotive usage based insurance market and strategies:
- In January 2022, Otonomo partnered with Audi. This partnership aimed to pilot consumer offerings, ranging from pay-as-you-drive insurance to general vehicle status to first notification of loss.
- In September 2021, LexisNexis Risk Solutions signed an agreement with Ford Motor Co. This agreement aimed at ensuring the availability of Ford-connected vehicle data to US auto insurers via the LexisNexis Telematics Exchange.
Automotive Usage Based Insurance Market Report Coverage and Deliverables
The “Automotive Usage Based Insurance Market Size and Forecast (2021–2031)” report provides a detailed analysis of the market covering below areas:
- Market size and forecast at global, regional, & country levels for all the key market segments covered under the scope
- Market dynamics such as drivers, restraints, and key opportunities
- Key future trends
- Detailed Porter’s Five Forces analysis
- Global and regional market analysis covering key market trends, major players, regulations, and recent market developments
- Industry landscape and competition analysis covering market concentration, heat map analysis, prominent players, and recent developments
- Detailed company profiles with SWOT analysis
Report Coverage
Revenue forecast, Company Analysis, Industry landscape, Growth factors, and Trends
Segment Covered
Technology Fitted ; and Policy Type and Pay-How-You-Drive ); and Geography
Regional Scope
North America, Europe, Asia Pacific, Middle East & Africa, South & Central America
Country Scope
Australia, Brazil, Canada, China, Germany, Italy, Mexico, RoW, Singapore, South Africa, United Kingdom, United States
The Insight Partners performs research in 4 major stages: Data Collection & Secondary Research, Primary Research, Data Analysis and Data Triangulation & Final Review.
- Data Collection and Secondary Research:
As a market research and consulting firm operating from a decade, we have published many reports and advised several clients across the globe. First step for any study will start with an assessment of currently available data and insights from existing reports. Further, historical and current market information is collected from Investor Presentations, Annual Reports, SEC Filings, etc., and other information related to company’s performance and market positioning are gathered from Paid Databases (Factiva, Hoovers, and Reuters) and various other publications available in public domain.
Several associations trade associates, technical forums, institutes, societies and organizations are accessed to gain technical as well as market related insights through their publications such as research papers, blogs and press releases related to the studies are referred to get cues about the market. Further, white papers, journals, magazines, and other news articles published in the last 3 years are scrutinized and analyzed to understand the current market trends.
- Primary Research:
The primarily interview analysis comprise of data obtained from industry participants interview and answers to survey questions gathered by in-house primary team.
For primary research, interviews are conducted with industry experts/CEOs/Marketing Managers/Sales Managers/VPs/Subject Matter Experts from both demand and supply side to get a 360-degree view of the market. The primary team conducts several interviews based on the complexity of the markets to understand the various market trends and dynamics which makes research more credible and precise.
A typical research interview fulfils the following functions:
- Provides first-hand information on the market size, market trends, growth trends, competitive landscape, and outlook
- Validates and strengthens in-house secondary research findings
- Develops the analysis team’s expertise and market understanding
Primary research involves email interactions and telephone interviews for each market, category, segment, and sub-segment across geographies. The participants who typically take part in such a process include, but are not limited to:
- Industry participants: VPs, business development managers, market intelligence managers and national sales managers
- Outside experts: Valuation experts, research analysts and key opinion leaders specializing in the electronics and semiconductor industry.
Below is the breakup of our primary respondents by company, designation, and region:
Once we receive the confirmation from primary research sources or primary respondents, we finalize the base year market estimation and forecast the data as per the macroeconomic and microeconomic factors assessed during data collection.
- Data Analysis:
Once data is validated through both secondary as well as primary respondents, we finalize the market estimations by hypothesis formulation and factor analysis at regional and country level.
- 3.1 Macro-Economic Factor Analysis:
We analyse macroeconomic indicators such the gross domestic product (GDP), increase in the demand for goods and services across industries, technological advancement, regional economic growth, governmental policies, the influence of COVID-19, PEST analysis, and other aspects. This analysis aids in setting benchmarks for various nations/regions and approximating market splits. Additionally, the general trend of the aforementioned components aid in determining the market's development possibilities.
- 3.2 Country Level Data:
Various factors that are especially aligned to the country are taken into account to determine the market size for a certain area and country, including the presence of vendors, such as headquarters and offices, the country's GDP, demand patterns, and industry growth. To comprehend the market dynamics for the nation, a number of growth variables, inhibitors, application areas, and current market trends are researched. The aforementioned elements aid in determining the country's overall market's growth potential.
- 3.3 Company Profile:
The “Table of Contents” is formulated by listing and analyzing more than 25 - 30 companies operating in the market ecosystem across geographies. However, we profile only 10 companies as a standard practice in our syndicate reports. These 10 companies comprise leading, emerging, and regional players. Nonetheless, our analysis is not restricted to the 10 listed companies, we also analyze other companies present in the market to develop a holistic view and understand the prevailing trends. The “Company Profiles” section in the report covers key facts, business description, products & services, financial information, SWOT analysis, and key developments. The financial information presented is extracted from the annual reports and official documents of the publicly listed companies. Upon collecting the information for the sections of respective companies, we verify them via various primary sources and then compile the data in respective company profiles. The company level information helps us in deriving the base number as well as in forecasting the market size.
- 3.4 Developing Base Number:
Aggregation of sales statistics (2020-2022) and macro-economic factor, and other secondary and primary research insights are utilized to arrive at base number and related market shares for 2022. The data gaps are identified in this step and relevant market data is analyzed, collected from paid primary interviews or databases. On finalizing the base year market size, forecasts are developed on the basis of macro-economic, industry and market growth factors and company level analysis.
- Data Triangulation and Final Review:
The market findings and base year market size calculations are validated from supply as well as demand side. Demand side validations are based on macro-economic factor analysis and benchmarks for respective regions and countries. In case of supply side validations, revenues of major companies are estimated (in case not available) based on industry benchmark, approximate number of employees, product portfolio, and primary interviews revenues are gathered. Further revenue from target product/service segment is assessed to avoid overshooting of market statistics. In case of heavy deviations between supply and demand side values, all thes steps are repeated to achieve synchronization.
We follow an iterative model, wherein we share our research findings with Subject Matter Experts (SME’s) and Key Opinion Leaders (KOLs) until consensus view of the market is not formulated – this model negates any drastic deviation in the opinions of experts. Only validated and universally acceptable research findings are quoted in our reports.
We have important check points that we use to validate our research findings – which we call – data triangulation, where we validate the information, we generate from secondary sources with primary interviews and then we re-validate with our internal data bases and Subject matter experts. This comprehensive model enables us to deliver high quality, reliable data in shortest possible time.
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