Usage-based insurance is a telematics-based insurance service in which premiums are based on the driving behavior of consumers. The global usage-based Insurance market size is projected to reach $77.25 billion by 2026, from $25.46 billion in 2020, at a CAGR of 20.32% during 2020-2026.
These insurance policies leverage the latest machine-to-machine technologies to capture dynamic data from in-car devices, enabling insurance providers to set and adjust premiums based on an individual's driving behavior, rather than any claim history.
This report also analyses the impact of Coronavirus COVID-19 on the Usage-Based Insurance industry.
TRENDS INFLUENCING THE USAGE-BASED INSURANCE MARKET
Smartphone and technology-based hybrid approaches play a significant role in driving the growth of the usage-based insurance market. The inclusion of technology makes the processes simpler, with a reduced service cost.
Furthermore, the increasing adoption of telematics and connected cars is expected to increase the growth of the usage-based insurance market size.
Automotive OEMs are increasingly working with smartphone and tablet manufacturers to deliver products and services that are available in vehicles. The increasing demand for electric vehicles (EVs) has also stimulated the creation of applications that allow consumers to attach their smartphones to their cars to test the vehicle batteries' real-time status. Such factors have led to the growth of app-based Usage-Based Insurance Market size.
Usage-based insurance reduces the risk of accidents and theft of vehicles as it tracks driving behavior, supplementing business growth. It is able to detect the missing or stolen vehicles in the telematics system linked to the vehicle by means of GPS. These factors are anticipated to increase the demand for Usage based insurance market size.
The insurance companies offering telematics insurance is constantly leveraging on various factors to enhance the solutions and deliver their customers with better schemes. One of the significant trends in the UBI market is the increasing number of partnerships among telematics companies and insurance companies. These partnerships are nourishing the UBI ecosystems in various countries, and the same trend is anticipated to increase the market size in the coming years.
USAGE-BASED INSURANCE MARKET SHARE
Based on the region, North America is expected to offer the maximum growth opportunities to vendors during the forecast period. The US is a key market for automotive usage-based insurance in North America. The bundling of Usage-based insurance with other telematics service providers and data pooling will have a positive influence on the growth of the usage-based insurance market size in this region.
The Manage-How-You-Drive (MHYD) segment is projected to rise at the fastest pace during the forecast period, as it provides the customers with a higher degree of versatility and independence.