Usage-based Insurance Market (By Policy Type: MHYD, PAYD, PHYD; By Device Type: OBD Dongle, Black Box, Smartphone, Others; By Vehicle Type: Commercial, Passenger) - Global Industry Analysis, Market Size, Opportunities and Forecast, 2019 - 2026

Category : BFSI | Published at : May-2019 | Delivery Format : PDF | Status: Published | Pages : 190


According to Acumen Research and Consulting, the global usage-based insurance market is expected to grow at noteworthy CAGR around 29 % throughout the forecast period and reach around US$ 190 billion by 2026.

Usage-based insurance (UBI) is an insurance type that determines vehicle premium by following the vehicle's conduct. An insurance company is provided with a wireless device to charge the premium for the vehicle that sends data. Use based (UBI) insurance is an insurance service for telecommunications based on premiums based on consumer driving behaviour. Type of road, braking and curling pattern are some of the factors that charge premiums. Usage-based insurance includes various services like pay-as-you-drive (PAYD), pay-how-you-drive (PHYD) and MHYD. Due to rising demand from the U.S. and Canada, North America is expected to expand at the fastest rate during the forecast period.

The report provides analysis of global Usage-based Insurance market for the period 2015-2026, wherein 2019 to 2026 is the forecast period and 2018 is considered as the base year.

Market Dynamics

The increased competition between insurance firms to quote competitive prices and to underwrite insurance effectively drives the UBI market. Effective vehicle tracking helps to accurately assess the risk and, consequently, insurance companies can determine compensation and maintain the actuarial reserve. The increase in consumer interest in connected vehicles increased the use of insurance. Additional services, such as vehicle diagnostics, theft tracking and breakdown notification, are provided to insurance companies which further reduce potential fraud and enhance corporate profitability. Further relief in premium rates are encouraged for drivers who drive safely, boosting the UBI market. Insurance based on consumption reduces the insurer's and insured prices, and therefore UBI demand is expected to rise during the projected period. In Italy and South Africa, the incidence of fraud and theft is considerably high. As a result, the high level of insurance premiums that lead consumers to take advantage of discounted UBI schemes is highly penetrating in Italy and South Africa. UBI is a complex insurance model requiring the interoperability of different industries such as insurance, IT, telecoms and hardware. The market faces several challenges, including legal hurdles and extensive IT infrastructure development. Many consumers are not sure that their data is shared. Data privacy maintenance is a key challenge for UBI providers.

The introduction of telematic smartphones allows automakers and insurers to collect driving data and record hard braking and acceleration driving parameters. They then use the driving data to design insurance policies based on usage and to determine the premium of the policyholder. The massive adoption of telematics on a smartphone should drive the growth of the insurance market based on users.

The adoption of UBI is boosted by declining prices of connected devices and mobility technology. There are increasing demand for appropriate fees among consumers, since a safe and rash driver is charged equally by traditional insurance. There are variable charges based on the drivers ' safe driving behavior in the UBI insurance model, which will lead to a growth of demand for this model in the near future. Increased competition and costs of claims have caused the automotive insurance industry to lose. UBI insurance supports better risk assessment and profitability maintenance.

Market Insights

The global UBI market can be divided into policies, device types, vehicle types and regions. The global UBI market can be classified as pay-how-you-drive (PHYD), pay-as-you-drive (Pay-as-you-drive) and manage-how-you-drive (MHYD), based on policy type. A highly favorite type of UBI policy has emerged from PAYD. PAYD is the fundamental UBI policy where premiums are determined on the basis of miles driven by the odometer or the installed device usually tracked. During the forecast period, demand for PHYD type of UBI will increase. By monitoring driving behaviour, such as acceleration, braking, and location and driving time, PHYD reduces premium. MHYD monitors not only conduct, but also provide the driver with feedback to promote safe driving.

The global UBI market was divided into black boxes, smartphones, OBD Dongle and others in terms of device type. In the blackbox segment the smartphone and OBD dongle segments played a major role on the UBI market. In Northern America, the OBD segment represented a significant market share, whereas smartphones in Europe and in Asia Pacific, after black box, are the second preferred device. In order for the car to be connected over the web without investment, the smartphone segment is expected to expand during the forecast period.

UBI is divided into passenger and commercial vehicles based on vehicle type. A dominant role in global UBI markets was played by the passenger car industry segment. The NPV segment will expand at a high rate of growth over the forecast period as the operating costs for the NPV are lower.

Impacting Factors

Telematics-based insurance reduces accident and car theft opportunities by monitoring driving behavior and complements market growth. You can detect the vehicles lost or stolen by GPS in the vehicle's telematics device. These factors are expected to boost telematic insurance demand in the short term.

Usage-based insurance is entirely telematics device-dependent. Installing telematics is a high-tech process and its costs will increase in the next few years. This will increase UBI service providers ' operating costs and restrict market growth. It is anticipated. However, telecoms services based on smartphones are expected to gain popularity because of their relatively low costs.

The technological progress is projected in the forecast period to fuel the growth of the use-based insurance industry, facilitating the process with the lower service rate. Increasing market growth is driven through smartphones and hybrid technology-based solutions. The U.S. household participation in UBI policies has increased considerably, according to the market study.

Regional Stance

UBI is divided up into North America, Europe, Asia-Pacific, Latin America, and the Middle East and Africa, depending on region. North America leads the global UBI market as far as revenues are concerned, followed by Europe. The market is expected to expand substantially in North America, also because consumer confidence is rising and UBI is expected in turn to increase. The Asia Pacific market is still at an emerging level in India and China with active pilot programs. Due to its high penetration in Italy and the United Kingdom, Europe had a significant share in the global UBI market.

Market Segmentation

Global Usage-based Insurance Market, By Policy Type

  • MHYD
  • PAYD
  • PHYD

Global Usage-based Insurance Market, By Device Type

  • OBD Dongle
  • Black Box
  • Smartphone
  • Others

Global Usage-based Insurance Market, By Vehicle Type

  • Commercial
  • Passenger

Global Usage-based Insurance Market, By Geography

  • North America.
  • Europe
  • Asia-Pacific
  • Latin America
  • Middle East and Africa (MEA)

The market research study on “Usage-based Insurance Market - Global Industry Analysis, Market Size, Opportunities and Forecast, 2019 - 2026” offers detailed insights on global Usage based Insurance market segments with market dynamics and their impact. The report also covers basic technology development policies.

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Key Players & Strategies

Progressive, AllState Insurance Company, AXA, AA, Allianz, Uniqa, Generali, MAIF, Groupama, Aviva, Uniposai, Insure the Box, State Farm and Liberty Mutual are key players in the global UBI market. Other operators include as their key strategies for increasing their market share, players have taken partnership and expansion. The Progressive Corporation, for example, has entered into a partnership with Zubie. The established players are strongly competitive by local firms such as Admiral Group plc, Allstate Corporation and others, mainly within advanced markets. Privacy concerns have presented major challenges for manufacturers and increasing telematics installation costs. The report discusses the key development strategies adopted by the companies.

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