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At what pace is the automotive usage-based insurance market growing, and what is its estimated value?
The automotive usage-based insurance market size has grown rapidly in recent years. It will grow from $48.9 billion in 2024 to $57.91 billion in 2025 at a compound annual growth rate (CAGR) of 18.4%. The growth in the historic period can be attributed to rising insurance premiums, the growth of connected vehicles, the need for improved risk assessment, regulatory changes favoring usage-based models, and the adoption of mobile apps.
The automotive usage-based insurance market size is expected to see rapid growth in the next few years. It will grow to $112.35 billion in 2029 at a compound annual growth rate (CAGR) of 18.0%. The growth in the forecast period can be attributed to advancements in AI and machine learning, enhanced data privacy and security measures, integration with smart home technology, growth in subscription-based insurance models, and rising environmental concerns. Major trends in the forecast period include integration of AI and machine learning for enhanced risk assessment, the rise of personalized and flexible insurance models, increasing adoption of telematics in electric vehicles, the incorporation of real time data from connected and autonomous vehicles, and growth in subscription-based.
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What are the top drivers to the rising demand in the automotive usage-based insurance market?
The increasing vehicle ownership is expected to propel the growth of the automotive usage-based insurance market going forward. Vehicle ownership refers to the possession and registration of any motorized vehicle by an individual or entity that involves having the rights and responsibilities associated with the vehicle. The increase in vehicle ownership is driven by economic growth, higher disposable incomes, urbanization, and the growing need for personal mobility. Automotive usage-based insurance (UBI) encourages safe and low-mileage drivers with cheaper premiums, giving personalized rates based on driving patterns that attract cost-conscious car owners. For instance, in June 2024, according to Statistics Canada, a Canada-based government agency, the total number of road motor vehicles registered in Canada in 2022 was 26.3 million, a 0.3% increase from 2021. Therefore, increasing vehicle ownership is driving the growth of the automotive usage-based insurance market.
How is the automotive usage-based insurance market segmented?
The automotive usage-based insurance market covered in this report is segmented –
1) By Type: Pay-As-You-Drive (PAYD), Pay-How-You-Drive (PHYD), Manage-How-You-Drive (MHYD)
2) By Vehicle Type: Passenger Cars, Commercial Vehicles
3) By Technology: Black Box, On-Board Diagnostics (OBD)-II, Embedded, Smartphone, Other Technologies
4) By Distribution Channel: Insurance Companies, Aggregator Platforms
5) By End-User: Individual Consumers, Fleet Owners Or Managers
Subsegments:
1) By Pay-As-You-Drive (PAYD): Distance-Based PAYD Insurance, Time-Based PAYD Insurance, Geographical PAYD Insurance
2) By Pay-How-You-Drive (PHYD): Driving Behavior-Based PHYD Insurance, Speed And Acceleration-Based PHYD Insurance, Risk-Based PHYD Insurance (Harsh Braking, Cornering)
3) By Manage-How-You-Drive (MHYD): Telematics-Driven MHYD Insurance, Driver Coaching And Feedback-Based MHYD, Risk Reduction And Safety-Enhanced MHYD
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Who are the top competitors in the automotive usage-based insurance market?
Major companies operating in the automotive usage-based insurance market are State Farm, MetLife Services and Solutions LLC, Nationwide Mutual Insurance Company, Allstate Insurance Company, Progressive Casualty Insurance Company, Chubb Limited, The Travelers Indemnity Company, Aviva plc, Government Employees Insurance Company (GEICO), MAPFRE SA, American Family Insurance, Mitsui Sumitomo Insurance Group, Bajaj Finserv Limited, Verisk Analytics Inc., Liberty Mutual Group Inc., Root Insurance Company, The Zebra, Lemonade Inc., Berjaya Sompo Insurance Berhad, Arity LLC, Octo Telematics S.p.A, Insurethebox limited, Flock Limited, Mile Auto Inc.
What significant trends should we anticipate in the automotive usage-based insurance market over the forecast period?
Major companies operating in the automotive usage-based insurance market are focusing on developing innovative products such as usage-based insurance models to offer personalized premiums, enhancing customer engagement, and risk assessment. Usage-based insurance models use data collected from a vehicle’s telematics system to assess driving habits such as speed, distance, and frequency. This allows insurers to offer customized premiums, rewarding safe driving and providing more accurate risk assessments. For instance, in August 2024, Zuno General Insurance Limited, an India-based insurance company, launched Pay How You Drive to reward safe driving practices and provide customers with greater control over their insurance costs. This insurance coverage personalizes car insurance premiums by linking them to individual driving behavior, assessed through a mobile app that provides a Zuno Driving Quotient. This innovative approach not only offers discounts based on driving scores but also incentives safe driving practices, allowing customers to monitor their performance and gain rewards for improved driving habits.
Which regional trends are influencing the automotive usage-based insurance market, and which area dominates the industry?
North America was the largest region in the automotive usage based insurance market in 2024. Asia-Pacific is expected to be the fastest-growing region in the forecast period. The regions covered in the automotive usage-based insurance market report are Asia-Pacific, Western Europe, Eastern Europe, North America, South America, Middle East, Africa.
What Does The Automotive Usage-Based Insurance Market Report 2025 Offer?
The automotive usage-based insurance market research report from The Business Research Company offers global market size, growth rate, regional shares, competitor analysis, detailed segments, trends, and opportunities.
Automotive usage-based insurance (UBI) is a type of auto insurance in which the premium is calculated based on the actual usage of the vehicle. This insurance model uses telematics technology to track driving habits, mileage, and other pertinent factors.
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