Usage-Based Insurance Market to Grow with a CAGR of 26.32% Globally through 2028
Increasing awareness of the benefits of UBI among
consumer and rise of autonomous vehicles are factors driving the global
usage-based insurance market in the forecast period 2024-2028.
According to TechSci Research report, “Global Usage-Based
Insurance Market - Industry Size, Share, Trends, Competition Forecast
& Opportunities, 2028”, the Global Usage-Based Insurance Market stood
at USD 25.21 billion in 2022 and is anticipated to grow with a CAGR of 26.32%
in the forecast period, 2024-2028. Global Usage-Based Insurance (UBI) is a
transformative insurance model that leverages telematics technology to monitor
and assess policyholders' behavior in real-time. It offers personalized
insurance premiums based on individual driving habits, encouraging safer and
more responsible driving. UBI programs typically track factors like speed,
braking, and location, enabling insurers to calculate premiums more accurately.
This innovative approach benefits both insurers, who can reduce claims costs
and improve risk assessment, and policyholders, who may enjoy lower premiums.
While UBI faces challenges related to privacy, data accuracy, and equity, its
adoption is on the rise globally, reshaping the insurance industry and paving
the way for more customized and data-driven insurance solutions.
One of the central tenets of global UBI is the use of
telematics devices installed in vehicles or smartphone apps that collect a wide
range of data on how a person drives. This data encompasses factors such as
speed, acceleration, braking habits, and even the time of day and location of
travel. With this granular information, insurers can build a more accurate and
comprehensive profile of each policyholder's risk, allowing for a more precise
assessment of insurance premiums. Safer drivers, those who exhibit responsible
habits like obeying speed limits and avoiding sudden stops, are rewarded with
lower premiums. Conversely, higher-risk drivers may see their premiums adjust
accordingly, incentivizing improved driving behaviors.
Global UBI has seen rapid growth and adoption in
recent years, thanks to several key drivers. Technological advancements,
including the ubiquity of smartphones and the proliferation of in-vehicle
telematics systems, have made it easier and more cost-effective to collect and
process the necessary data. This technological evolution has also led to more
accurate risk assessments and a more equitable distribution of premiums. As a
result, UBI has become an attractive option for insurers looking to leverage data
analytics and attract a broader customer base.
Changing consumer expectations are another driving
force behind the global UBI trend. Modern consumers increasingly expect
personalized, on-demand services tailored to their unique needs and
preferences. UBI aligns with these expectations by providing a more interactive
and individually tailored insurance experience. Policyholders have the
opportunity to influence their premiums directly through their driving habits,
giving them a sense of agency and control over their insurance costs. As
awareness of UBI's benefits spreads, more drivers are considering making the
switch to usage-based policies.
Moreover, government support and regulatory incentives
have played a vital role in fostering the growth of UBI globally. Governments
in many regions recognize the potential of UBI to promote road safety, reduce
emissions, and alleviate traffic congestion. As such, they have introduced
policies and incentives to encourage the adoption of telematics-based insurance
programs. These measures include tax incentives, reduced registration fees for
vehicles equipped with telematics devices, and mandates for insurance companies
to offer UBI options. Regulatory support not only legitimizes UBI but also
accelerates its growth by creating a favorable environment for insurers to
develop and market usage-based products.
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spread through XXX Pages and an in-depth TOC on "Usage-Based Insurance Market”.
Despite its remarkable growth and potential benefits,
global UBI faces several challenges that must be addressed for its continued
success. One major concern is data privacy and security. With the collection of
sensitive driving data, there is a heightened risk of data breaches and
unauthorized access. Policyholders worry about the potential misuse of their
data, which can lead to privacy concerns and hinder UBI adoption. To address
this challenge, insurers must invest in robust data encryption, secure storage,
and transparent data usage policies. They must also ensure compliance with data
protection regulations to build trust with their policyholders.
The global usage-based insurance market is segmented
into vehicle type, vehicle age, policy type, regional distribution, and
company.
Based on policy type, the market is segmented into pay-as-you-drive
insurance (PAYD), Pay-how-you-drive insurance (PHYD), and manage-how-you-drive
insurance (MHYD).
Pay-As-You-Drive (PAYD) insurance is
emerging as the fastest-growing segment in global Usage-Based Insurance (UBI).
PAYD policies offer a highly flexible and cost-effective insurance solution,
with premiums directly tied to the number of miles driven. This appeals to
environmentally conscious consumers, urban dwellers, and occasional drivers
seeking to lower their insurance costs. PAYD UBI programs utilize telematics
technology to accurately track mileage, making it a simpler and more equitable
approach to auto insurance. As the demand for personalized and fair insurance
rates continues to rise, PAYD insurance is experiencing significant traction,
reshaping the landscape of auto insurance and encouraging more responsible
driving behaviour.
Major companies operating in Global Usage-Based
Insurance Market are:
- Cambridge Mobile Telematics
- Progressive Casualty Insurance Company
- Inseego Corp.
- The Floow Limited
- Assicurazioni Generali S.p.A
- Equitable Holdings, Inc.
- The Modus Group, LLC
- Octo Group S.p.A
- TomTom International BV.
- Allianz Partners
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“Global Usage-Based Insurance (UBI) is a dynamic and
transformative trend in the insurance industry. UBI leverages technology, such
as telematics and data analytics, to monitor and assess individual driving
behavior, allowing insurers to offer personalized and risk-adjusted premiums.
This data-driven approach encourages safer driving practices and provides
cost-saving opportunities for policyholders. Key drivers of UBI's growth
include technological advancements, expanded applications beyond auto insurance,
integration with autonomous and electric vehicles, and an emphasis on
behavioral analytics and personalization. Challenges include privacy concerns,
equity issues, data accuracy, and regulatory compliance. Nevertheless, UBI
continues to gain momentum, offering a glimpse into the future of more precise,
customer-centric, and data-informed insurance solutions worldwide,” said Mr.
Karan Chechi, Research Director with TechSci Research, a research-based
management consulting firm.
“Usage-Based
Insurance Market – Global Industry Size, Share, Trends, Opportunity, and
Forecast, Segmented By Vehicle Type (Passenger Car, Commercial Vehicle), By
Vehicle Age (New Vehicles, Used Vehicles), By Policy Type (Pay-As-You-Drive
Insurance (PAYD), Pay-How-You-Drive Insurance (PHYD), and Manage-How-You-Drive
Insurance (MHYD)), By Region, Competition”, has evaluated the future
growth potential of global usage-based insurance market and provides statistics
& information on market size, structure and future market growth. The
report intends to provide cutting-edge market intelligence and help decision
makers take sound investment decisions. Besides, the report also identifies and
analyzes the emerging trends along with essential drivers, challenges, and
opportunities in the global usage-based insurance market.
Contact
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Techsci Research LLC
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