Usage based Insurance Market - Snapshot
Usage-based insurance (UBI) is a type of motor insurance that determines the premium of the vehicle by tracking the driving behavior of the vehicle. A wireless device is fitted in the vehicle that transmits data to the insurance company in order to charge the premium.
Rising competition among insurance companies to quote a competitive price and to effectively underwrite the insurance is driving the UBI market. Real-time tracking of the vehicle helps assess the risk more accurately and hence, insurance companies can determine indemnity and maintain actuarial reserve. Rising consumer interest in connected vehicles has boosted the adoption of the usage-based insurance. Insurance companies are providing additional services, such as vehicle diagnostics, theft tracking, and breakdown notification, which further help reduce potential fraud and improve underwriting profitability. Drivers who drive safely are encouraged with incentives and quoted further relief in premium, thus boosting the UBI market. Usage-based insurance reduces the price for both the insurer and insured and hence, the demand for UBI is expected to rise during the forecast period. Incidences of fraud and theft are considerably high in Italy and South Africa. Consequently, UBI has high penetration in Italy and South Africa owing to high insurance premiums driving consumers to resort to discounted UBI schemes.
UBI is a complex insurance model, which requires cross-functioning of various industries such as insurance, IT, telecom, and hardware. The market faces several challenges such as legal hurdles and development of extensive IT infrastructure. Several consumers are not confident about sharing their data. Maintaining data privacy is a critical challenge for insurance companies providing UBI.
The global UBI market can be segmented based on policy type, device type, vehicle type, and region. Based on policy type, the global UBI market can be classified into pay-how-you-drive (PHYD), pay-as-you-drive (PAYD), and manage-how-you-drive (MHYD). PAYD has emerged as a highly preferred type of UBI policy. PAYD is the basic UBI policy where the premiums are decided on the basis of miles driven, usually tracked by the odometer or installed device. Demand for PHYD type of UBI is anticipated to increase during the forecast period. PHYD discounts the premium by monitoring driving behavior, such as acceleration, braking, and location and time of drive. MHYD not only monitors driving behaviour but also provides feedback to the driver in order to encourage safe driving.
In terms of device type, the global UBI market has been divided into black box, OBD dongle, smartphone, and others. The black box segment held a dominant share of the UBI market, followed by smartphone and OBD dongle segments. The OBD dongle segment accounted for a notable share of the market in North America, while the smartphone is the second-most preferred device, after the black box, in Europe and Asia Pacific. The smartphone segment is expected to expand during the forecast period, as it is a highly convenient means to connect the vehicle over the web with no investment.
Based on vehicle type, the UBI market has been segregated into passenger vehicle and commercial vehicle. The passenger vehicle segment held a dominant share of the global UBI market. The commercial vehicle segment is projected to expand at a high growth rate during the forecast period due to the lower the operating cost of the commercial vehicle.
Based on region, the UBI market has been segmented into North America, Europe, Asia Pacific, Latin America, and Middle East & Africa. In terms of revenue, North America leads the global UBI market, followed by Europe. The market in North America is also expected to expand significantly owing to rising consumer confidence, which in turn is projected to boost the adoption of UBI. The market in Asia Pacific is still at a nascent stage with active pilot programs being conducted in India and China. Europe held a notable share of the global UBI market due to high penetration in Italy and the U.K.
Key players operating in the global UBI market include Progressive, AllState Insurance Company, AXA, AA, Allianz, Uniqa, Generalli, MAIF, Groupama, Aviva, Uniposai, Insure the Box, State Farm, and Liberty Mutual.
Usage based Insurance Market - Overview
This report analyzes and forecasts the market for usage-based insurance at the global and regional level. The market has been forecasted based on volume (thousand units) and value (US$ Mn) from 2019 to 2027. The study includes drivers and restraints of the global usage-based insurance market. It also covers the impact of these drivers and restraints on the demand for Usage-based Insurance services during the forecast period. The report also highlights opportunities and future scope in the market at the global and regional level.
The report comprises a detailed value chain analysis, which provides a comprehensive view of the global usage-based insurance market. The Porter’s Five Forces model for the market has also been included to help understand the competitive landscape in the market. The study encompasses market attractiveness analysis, wherein the service is benchmarked based on market size, growth rate, and general market share.
The study provides a decisive view of the global usage-based insurance market by segmenting it in terms of policy type, device type, vehicle type, and region. These segments have been analyzed based on present and future trends. Regional segmentation includes the current and forecast demand for Usage-based Insurance in North America, Europe, Asia Pacific, Latin America, and Middle East & Africa. The report also covers the demand for individual segments in all major countries across all the regions.
The study includes profiles of major companies operating in the global usage-based insurance market. Market players have been profiled in terms of attributes such as company overview, financial overview, business strategies, and recent developments.
Rising competition among insurance companies to quote a competitive price and to effectively underwrite the insurance is driving the usage-based insurance market. Real-time tracking of the vehicle helps asses the risk more accurately and hence, insurance companies can determine indemnity and maintain actuarial reserve. Rising consumer interest in connected vehicles has fueled the adoption of usage-based insurance services.
The report provides the estimated cumulative market size of usage-based insurance for 2018 and forecast for the next nine years. The global market size has been provided in terms of volume and value. Market numbers have been estimated based on policy type, device type, vehicle type, and regional segments. Market size and forecast for each policy type, device type, and vehicle have been provided in terms of global and regional/country markets.
In order to compile the research report, we conducted in-depth interviews and discussions with a number of key industry participants and opinion leaders. Primary research represents the bulk of research efforts, supplemented by extensive secondary research. We reviewed key player’s product literature, annual reports, press releases, and relevant documents for competitive analysis and market understanding. Secondary research also includes a search of recent trade, technical writing, internet sources, and statistics data from government websites, trade associations, and agencies. This has proven to be the most reliable, effective, and successful approach for obtaining precise market data, capturing industry participants’ insights, and recognizing business opportunities.
Secondary research sources that are typically referred to include, but are not limited to company websites, annual reports, financial reports, broker reports, investor presentations, and SEC filings, internal and external proprietary databases, and relevant patent and regulatory databases, national government documents, statistical databases, and market reports, news articles, press releases, and webcasts specific to companies operating in the market, National government documents, statistical databases, and market reports, OICA, JAMA, Factiva, etc.
Primary research involves e-mail interactions, telephonic interviews, LinkedIn interviews, and face-to-face interviews for each market, category, segment, and sub-segment across geographies. We conduct primary interviews on an ongoing basis with industry participants and commentators in order to validate the data and analysis. Primary interviews provide firsthand information on market size, market trends, growth trends, competitive landscape, and outlook, etc. These help validate and strengthen secondary research findings. These also help develop the analysis team’s expertise and market understanding.
The global usage-based insurance market has been segmented as follows:
- Global Usage-based Insurance Market, by Policy Type
- Pay-How-You-Drive (PHYD)
- Pay-As-You-Drive (PAYD)
- Manage-How-You-Drive (MHYD)
- Global Usage-based Insurance Market, by Device Type
- Black Box
- OBD Dongle
- Global Usage-based Insurance Market, by Vehicle Type
- Passenger Vehicle
- Commercial Vehicle
- Global Usage-based Insurance Market, by Region/ by Country/ Sub-region
- North America
- Rest of Europe
- Asia Pacific
- Rest of Asia Pacific
- Middle East & Africa (MEA)
- South Africa
- Rest of MEA
- Latin America
- Rest of Latin America