Usage Based Insurance Market Share, Size, Trends, Industry Analysis Report, By Policy Type (Pay-As-You-Drive (PAYD), Pay-How-You-Drive (PHYD), and Manage-How-You-Drive (MHYD)); By Technology; By Region; Segment Forecast, 2024- 2032
- Published Date:Feb-2024
- Pages: 117
- Format: PDF
- Report ID: PM4630
- Base Year: 2023
- Historical Data: 2019-2022
Report Outlook
Usage based insurance market size was valued at USD 28.70 billion in 2023. The market is anticipated to grow from USD 34.26 billion in 2024 to USD 154.89 billion by 2032, exhibiting a CAGR of 20.8% during the forecast period.
Market Overview
The growing adoption of usage-based insurance owing to the unique benefits of this insurance over traditional insurance is a primary factor responsible for the market growth. Moreover, an increasing shift of consumers from traditional insurance model to usage-based insurance will propel the market growth during the forecast period. Furthermore, rising production and distribution of vehicles coupled with the surging demand for customized insurance plans are also contributing to the usage-based insurance market growth.
- For instance, according to the International Organization of Motor Vehicle Manufacturers, in 2022, the production of vehicles in Malaysia and Indonesia witnessed an increase of around 46.0% and 31.0% compared to 2021.
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The ability to monitor and analyze driving behavior in real time with the help of smartphone-centric solutions contributes to market growth. Moreover, the benefit of usage-based insurance to reduce cost savings for the policyholders is attracting a large population pool towards this insurance. Furthermore, factors such as regulatory support and increasing awareness related to the exceptional benefits provided by this data-driven model of insurance are propelling the growth of the usage-based insurance market.
The research study provides a comprehensive analysis of the industry, assessing the market on the basis of various segments and sub-segments. It sheds light on the competitive landscape and introduces Usage Based Insurance Market key players from the perspective of market share, concentration ratio, etc. The study is a vital resource for understanding the growth drivers, opportunities, and challenges in the industry.
However, the high costs associated with the implementation and initial infrastructure required for usage-based insurance limit the market growth. Moreover, problems related to the privacy of customers during the data collection process and chances of cyber-attacks are expected to restrain the growth of the usage-based insurance during the market forecast timeframe. Furthermore, this technology fails to recognize whether hard braking and acceleration are used for defensive action or reckless driving. Such drawbacks are expected to impact the market growth negatively.
Growth Factors
Exceptional benefits of usage based insurance over traditional insurance are driving the market growth
Usage based insurance is one of the leading causes of the revolution taking place in the insurance sector. Usage based insurance is personalized insurance that calculates the premium depending on factors including driving behaviour and distance travelled. The advantages, such as rewards for safe driving, reduction in claim frauds, customized cost of insurance, and encouragement of better driving habits, are expected to contribute to the growth of the usage-based insurance market during the forecast timeframe.
Moreover, the ability of this insurance to accurately analyse the accident cause and damage is attracting millennials and GenZ. For instance, according to the consumer study conducted by Edelweiss General Insurance, millennials and GenZ across India want usage based insurance that rewards safe driving. Such strong intention to buy usage based insurance will boost the market growth in the upcoming years.
Regulatory support and a strong focus of government towards usage based insurance will prove beneficial for the market growth
The increasing popularity of usage based insurance over traditional systems is attracting insurers across various countries. The promising benefits provided by this insurance are also encouraging the regulatory bodies to implement usage based insurance in various countries. Moreover, usage based insurance improves driving skills and promotes safer driving behavior, which ultimately attracts the regulatory bodies.
For instance, in July 2022, the Insurance Regulatory and Development Authority of India (IRDAI) notified the insurance providers regarding the issuance of Usage Based Insurance (UBI) as an add-on to their damage policies. This revolutionary change in the motor insurance industry will significantly contribute to the increased growth of usage based insurance market in the coming years.
Restraining Factors
Owing to disadvantages of usage based insurance limit the market growth
However, there are several drawbacks to usage-based insurance. One of the major disadvantages of this insurance system is the concern about customer privacy. The devices that are plugged into the cars track distance and location. Hence, the growing concern among potential customers about the misuse of this information will limit the expansion of usage based insurance market. Moreover, the failure of this insurance system to record certain details, such as hard braking and acceleration for defensive things, will limit its adoption. For instance, in some circumstances, when a child or animal is running into the road or in case of a medical emergency, the policyholder could be punished for committing a perfectly reasonable and safe act.
Report Segmentation
The market is primarily segmented based on policy type, technology, vehicle age, vehicle type, and region.
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By Policy Type |
By Technology |
By Vehicle Age |
By Vehicle Type |
By Region |
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By Policy Type Insights
Pay-As-You-Drive (PAYD) segment captured the largest market value of usage based insurance market
The Pay-As-You-Drive (PAYD) captured the largest market value of usage based insurance market in 2023. In this type, the premium of a customer is calculated based on the distance covered. The large share of this segment is owing to the option provided for selecting the slab of distance as per the usage of an individual. Moreover, advantages such as own damage and third-party liability coverage, the flexibility to enhance the car insurance policy by adding extra coverage, and the ability to receive maximum discounts based on the number of miles driven are anticipated to support the segmental growth in the coming years.
By Technology Insights
The smartphones segment is expected to witness significant growth in the coming years
The smartphone segment is expected to witness a significant CAGR during the forecast period. Nowadays, smartphones can send information and are connected to cars. The availability of inbuilt sensors such as GPS, accelerometers, and gyroscopes in smartphones is propelling segmental growth. Moreover, a large storage capacity, superior processing power, and cloud integration leading to the reduction in data handling and storage costs will prove beneficial for the segmental growth.
By Vehicle Age Insights
The new vehicles segment is expected to gain significant popularity in the usage based insurance market
The new vehicles segment is expected to gain significant market value in the usage based insurance market during the projected years. The segmental growth is attributed to the increasing demand for usage based insurance from millennials and GenZ and rising production and sales of new vehicles. For instance, according to the recent statistics published by the International Organization of Motor Vehicle Manufacturers, in 2022, the sales of new vehicles in Mexico increased by 8.4% compared to 2021. Moreover, the strong focus of automotive manufacturers on the production of cars with pre-installed telematic devices, connected car technology, and sensors will prove beneficial for the growth of usage-based insurance market.
Regional Insights
North America usage based insurance market garnered the largest market size in 2023
North America accounted for a considerable market share of the market in 2023. The large share of this region is attributed to the increasing popularity of usage based insurance owing to the unique benefits provided by them. Moreover, the growth in the number of vehicles sold and rising government initiatives to promote these insurance systems will positively influence the market growth in the coming years.
Furthermore, the increasing focus of market players toward innovative marketing strategies coupled with the growing availability of apps to assist the drivers is propelling the market growth. For instance, in February 2022, Mercury Insurance made its usage-based insurance app, MercuryGO, available in New Jersey, U.S. With the help of skill scores provided by this app, drivers can get immediate feedback on their driving habits.
Asia Pacific region is projected to grow at the fastest CAGR
Asia Pacific region is projected to be the fastest-growing market in the coming years. The highest rates of car ownership in this region, coupled with the increasing need for cost-effective insurance solutions, are expected to fuel the growth during the market forecast timeframe. Moreover, increased affordability to low-risk customers and a reduction in fraudulent claims are the benefits that drive the adoption of usage-based insurance in the region.
Furthermore, strategic initiatives such as collaborations and partnerships among market players to provide usage-based insurance in Southeast Asia will propel the market growth. For instance, in February 2021, Mitsui Sumitomo Insurance and automotive marketplace Carro announced their partnership to introduce the first usage-based car insurance program in Southeast Asia.
Key Market Players & Competitive Insights
Launch of new policies and collaborations are strengthening the market share of the companies
In terms of competitive scenario, the usage based insurance market is consolidated. The increasing focus of companies towards the launch of new usage-based insurance policies and growing collaborations between the market players are the factors responsible for the competitive environment in the market. For instance, in December 2020, Progressive Casualty Insurance Company offered Snapshot ProView, which is a voluntary usage based insurance and fleet management program for small business owners.
Some of the major players operating in the global market include:
- Aioi Nissay Dowa Insurance UK Ltd (UK)
- Allianz (Germany)
- Allstate Insurance Company (U.S.)
- Bridgestone Mobility Solutions B.V. (Netherlands)
- Liberty Mutual Insurance (U.S.)
- MAPFRE (Spain)
- Progressive Casualty Insurance Company (U.S.)
- State Farm Mutual Automobile Insurance Company (U.S.)
- UNIPOLSAI ASSICURAZIONI S.P.A. (Italy)
- Verisk Analytics, Inc. (U.S.)
- Verizon (U.S.)
Recent Developments in the Industry
- In March 2022, State Farm Mutual Automobile & Ford introduced Drive Safe for consumers eligible for the connected Ford vehicles to benefit from the usage-based insurance.
Report Coverage
The usage based insurance market report emphasizes on key regions across the globe to provide better understanding of the product to the users. Also, the report provides market analysis into recent developments, trends and analyzes the technologies that are gaining traction around the globe. Furthermore, the report covers in-depth qualitative market analysis pertaining to various paradigm shifts associated with the transformation of these solutions.
The market report provides detailed analysis of the market while focusing on various key aspects such as competitive analysis, policy type, technology, vehicle age, vehicle type, and their futuristic growth opportunities.
Usage Based Insurance Market Report Scope
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Report Attributes |
Details |
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Market size value in 2024 |
USD 34.26 billion |
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Revenue forecast in 2032 |
USD 154.89 billion |
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CAGR |
20.8% from 2024 – 2032 |
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Base year |
2023 |
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Historical data |
2019 – 2022 |
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Forecast period |
2024 – 2032 |
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Quantitative units |
Revenue in USD billion and CAGR from 2024 to 2032 |
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Segments covered |
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Regional scope |
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Competitive Landscape |
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Report Format |
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Customization |
Report customization as per your requirements with respect to countries, region and segmentation. |
Navigate through the intricacies of the 2024 Intelligent Usage Based Insurance Market with precision, thanks to the comprehensive statistics on market share, size, and revenue growth rate assembled by Polaris Market Research Industry Reports. This thorough analysis not only provides a glimpse into the historical context but also extends its reach with a market forecast outlook until 2032. Immerse yourself in the richness of this industry analysis by securing a complimentary PDF download of the sample report.
FAQ's
The Usage Based Insurance Market report covering key segments are policy type, technology, vehicle age, vehicle type, and region.
Usage Based Insurance Market Size Worth USD 154.89 Billion By 2032
Usage based insurance market exhibiting a CAGR of 20.8% during the forecast period.
North America is leading the global market
key driving factors in Usage Based Insurance Market are Regulatory support and a strong focus of government towards usage based insurance
