Global usage-based automotive insurance market value was USD 28.0 billion in 2019. It is projected to grow at a compound annual rate (CAGR of 21.3%) between 2020 and 2027. The market's growth is largely due to increased penetration of usage-based insurance. This is due to the lower premium than standard insurance and high adoption of connected cars services. There has been an increase in consumer preference for usage-based insurance in the automotive industry. The market is expected to be driven by increased sales of pre-equipped and telematics cars as well as government regulations regarding vehicle safety. Telematics-based insurance services have been adopted due to changing dynamics in the automotive insurance industry.
The vehicle manufacturer initially installed a telematics device that collects data and transmits it wirelessly to the carrier. Telematics also allows insurance companies to track vehicle usage, monitor driver behavior and communicate with them on a regular basis. Telematics-based insurance services have been embraced by many early adopters.
A usage-based policy allows customers to pay a premium according to their driving patterns and mileage. These insurance features include fraud detection, pricing accuracy and stolen vehicle recovery. They also allow for automated claims management and reduction or elimination of towing fees. This information is used to offer value-added services and reduce claims leakage, as well as lowering operating costs. This usage-based insurance for automobile serves customers and the insurance providers efficiently, which will drive market growth.
Insurance companies offer discounts on premiums that are based on the real-time monitoring and analysis of vehicle drivers. The market growth will be slowed by data theft, data privacy, and low transparency in data acquisition. Poor internet connectivity could also affect real-time monitoring systems' outcomes, which may impact insurance companies' discounts on premiums. Market growth may also be affected by design and personal integrity issues.
With a 60.29% share in 2019, Pay-How-You Drive (PHYD), dominated the market in terms of revenue. Pay-How-You Drive (PHYD), a type of insurance premium, is calculated based on the vehicle driver's driving patterns. This insurance measures metrics like how hard you brake and accelerate, as well as the sharpness of your turns. Customers can also use this type of insurance policy for safe driving habits and to reduce reckless driving to earn rewards and incentives on their insurance premiums.
The Manage-How-You-Drive segment (MHYD), is expected to see significant growth during the forecast period at a CAGR exceeding 24.1%. Instantaneous feedback from drivers about their driving habits, which allows for real-time insurance premiums, allowing for this growth. Market growth will also be boosted by the integration of connected services such as vehicle wellness reports and theft insurance programs with MHYD packages. Due to the advantages of mileage-based insurance premiums, the Pay-As You-Drive (PAYD), segment will experience significant growth.
With a 50.16% revenue share in 2019, the OBD-II segment was the leader in the automotive usage-based insurance market. For real-time data, the onboard dongles can be plugged into your vehicle. They can evaluate everything, including speeding, collisions, acceleration and braking. These dongles are also being offered by insurance companies. This has led to a rise in the use of OBD-II-based dongles.
The smartphone market is expected to grow at a CAGR exceeding 27.0% during the forecast period. This technology is gaining popularity because it doesn't require an external telematics device to monitor the vehicle. Insurance providers can monitor and track driver's driving patterns using their smartphone. Customers and insurers are both well-served as they don't need to spend on the telematics device needed for use-based automotive insurance. Insurance companies have partnered with software providers to offer smartphone-based, telematics insurance.
With a market share of 88.04%, the passenger vehicle segment was the leader in terms of revenue. This is due to the increasing sales of passenger cars with a pre-installed, telematics device. The vehicle's health, distance traveled and driving habits can be monitored via the telematics device. Passenger vehicle drivers can also benefit from telematics solutions to improve driving habits. This will result in lower insurance premiums and discounts for insurance for safe driving.
The forecast period will see a significant CAGR of 18.1% in the commercial vehicle segment. Due to the large presence of commercial fleets, this segment will gain momentum quickly. Commercial fleet owners are reaping the benefits of usage-based coverage due to lower insurance premiums.
North America was the dominant market with a 34.94% revenue share in 2019. The dominance of the market can be attributed largely to the presence key players in the region such as Allstate Corporation and Progressive Corporation. Technological advancements and the huge demand for interconnected services are further driving regional market growth. Market growth is also being driven by the increasing use of mobility as a service and partnerships between telematics companies and insurance companies.
Asia Pacific will see a significant CAGR of more than 25.2% between 2020 and 2027. Opportunities for market growth are expected to be created by countries like Japan and China. The Asia Pacific region is still in its infancy due to a lack of consumer awareness and data protection. The proliferation of smartphones and mobile connectivity will likely boost usage-based insurance in the automotive market.
Because of the existence of established companies worldwide, the market is well-consolidated. Progressive Corporation, Allstate Corporation and State Farm Automobile Mutual Insurance Company are the major players in the market. Liberty Mutual Insurance Company, Allianz SE and AXA S.A. Companies primarily focus on mergers, acquisitions and joint ventures or collaborations in order to maintain a competitive market position. The market players are also focusing on increasing their market presence through various growth strategies. These strategies allow organizations to grow their businesses geographically and increase their offerings in specific regions. Companies also focus on improving the user experience as part their growth strategy. The following are some of the most prominent players in the usage-based automotive insurance market:
Progressive Corporation
Generali Group
Mapfre S.A.
American International Group, Inc.
Up Market Research published a new report titled “Usage-based Insurance For Automotive Market research report which is segmented by Type (PHYD, PAYD, MHYD), by Technology (OBD II, Smartphones, Black Box), By Players/Companies Mapfre SA, American International Group Inc, Generali Group, Progressive Corporation”. As per the study the market is expected to grow at a CAGR of XX% in the forecast period.
Report Attributes | Report Details |
Report Title | Usage-based Insurance For Automotive Market Research Report |
By Type | PHYD, PAYD, MHYD |
By Technology | OBD II, Smartphones, Black Box |
By Companies | Mapfre SA, American International Group Inc, Generali Group, Progressive Corporation |
Regions Covered | North America, Europe, APAC, Latin America, MEA |
Base Year | 2020 |
Historical Year | 2018 to 2019 (Data from 2010 can be provided as per availability) |
Forecast Year | 2028 |
Number of Pages | 246 |
Number of Tables & Figures | 173 |
Customization Available | Yes, the report can be customized as per your need. |
The report covers comprehensive data on emerging trends, market drivers, growth opportunities, and restraints that can change the market dynamics of the industry. It provides an in-depth analysis of the market segments which include products, applications, and competitor analysis.
The market is segmented by Type (PHYD, PAYD, MHYD), by Technology (OBD II, Smartphones, Black Box).
Usage-based Insurance For Automotive Market research report delivers a close watch on leading competitors with strategic analysis, micro and macro market trend and scenarios, pricing analysis and a holistic overview of the market situations in the forecast period. It is a professional and a detailed report focusing on primary and secondary drivers, market share, leading segments and geographical analysis. Further, key players, major collaborations, merger & acquisitions along with trending innovation and business policies are reviewed in the report.
Key Benefits for Industry Participants & Stakeholders:
Based on region, the market is segmented into North America, Europe, Asia Pacific, Latin America and Middle East & Africa (MEA). North America region is further bifurcated into countries such as U.S., and Canada. The Europe region is further categorized into U.K., France, Germany, Italy, Spain, Russia, and Rest of Europe. Asia Pacific is further segmented into China, Japan, South Korea, India, Australia, South East Asia, and Rest of Asia Pacific. Latin America region is further segmented into Brazil, Mexico, and Rest of Latin America, and the MEA region is further divided into GCC, Turkey, South Africa, and Rest of MEA.
We have studied the Usage-based Insurance For Automotive Market in 360 degrees via. both primary & secondary research methodologies. This helped us in building an understanding of the current market dynamics, supply-demand gap, pricing trends, product preferences, consumer patterns & so on. The findings were further validated through primary research with industry experts & opinion leaders across countries. The data is further compiled & validated through various market estimation & data validation methodologies. Further, we also have our in-house data forecasting model to predict market growth up to 2028.
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