1 Global Automotive Usage-Based Insurance Market Size (Value) and CAGR (2024-2033)
In 2024, the global Automotive Usage-Based Insurance market was valued at USD 62665 million, with a CAGR of 19.6% from 2024 to 2033.
Automotive Usage-Based Insurance is an innovative insurance model that leverages telematics and data analytics to tailor insurance premiums based on the actual driving behavior and usage patterns of individual drivers. Unlike traditional auto insurance, which relies on static factors such as vehicle type, age, and historical claims data, UBI dynamically adjusts premiums in real-time based on how, when, and where the vehicle is driven. This approach not only promotes safer driving habits but also offers personalized and often more affordable insurance options for consumers.
Figure Global Automotive Usage-Based Insurance Market Size (M USD) and CAGR 2024-2033
2 Automotive Usage-Based Insurance Market Drivers
Technological Advancements: The rapid development of telematics, big data analytics, and mobile applications has been a major driver for the UBI market. These technologies enable the collection and analysis of detailed driving data, allowing insurers to offer more personalized and accurate pricing models. For example, telematics devices can monitor driving behavior in real-time, providing insurers with the data needed to assess risk more accurately. This technological progress has made UBI more accessible and appealing to both insurers and consumers.
Consumer Demand for Personalization: Modern consumers increasingly seek personalized products and services, and insurance is no exception. UBI offers a more tailored approach to auto insurance, where premiums are based on individual driving habits rather than generalized risk profiles. This appeals to drivers who believe they are safer or more responsible than the average driver, as they can potentially save on their insurance premiums. The ability to adjust premiums based on actual driving behavior also encourages safer driving practices, which can lead to fewer accidents and lower overall insurance costs.
Regulatory Support and Policy Changes: Governments and regulatory bodies in many regions are recognizing the benefits of UBI and are providing support through policy changes. For instance, some regions are encouraging the use of telematics to improve road safety and reduce emissions. In China, the China Banking and Insurance Regulatory Commission has explicitly supported the development of UBI, providing a policy framework that promotes innovation in auto insurance. Such regulatory support is crucial in legitimizing UBI and encouraging its adoption by both insurers and consumers.
3 Automotive Usage-Based Insurance Market Challenges
Technical and Data-Related Challenges: One of the primary challenges for UBI is the high cost and complexity of data acquisition. Collecting reliable and accurate driving data requires significant investment in telematics devices, data infrastructure, and analytics capabilities. The data collected must also be processed and analyzed effectively, which can be a daunting task for insurers, especially in the early stages of UBI implementation. Additionally, ensuring data privacy and security is crucial, as the collection and transmission of personal driving data raise concerns about potential privacy breaches.
Consumer Awareness and Acceptance: Many consumers are still unfamiliar with UBI and may be hesitant to adopt it due to concerns about privacy and the accuracy of data collection. Some drivers may also be skeptical about the benefits of UBI, fearing that their premiums could increase if their driving habits are closely monitored. This lack of awareness and trust can slow down the adoption rate of UBI, making it difficult for insurers to achieve economies of scale and reduce costs.
4 Global Automotive Usage-Based Insurance Market Size and Share by Type in 2024
PAYD (Pay-As-You-Drive): This pricing scheme is based on the actual distance driven by the vehicle. The premium is calculated according to the number of miles or kilometers driven, allowing drivers to pay only for the coverage they use. This model encourages more efficient driving habits and can lead to significant cost savings for low-mileage drivers. In 2024, the PAYD segment is expected to account for 45,571 million USD of the total UBI market, representing 72.72% of the market share.
PHYD/MHYD (Pay-How-You-Drive/Manage-How-You-Drive): These pricing schemes focus on the quality of driving behavior rather than just the distance driven. PHYD adjusts premiums based on factors such as acceleration, braking, speeding, and cornering, while MHYD goes a step further by providing real-time feedback to drivers to improve their driving habits. This approach not only rewards safe driving but also promotes safer roads. In 2024, the PHYD/MHYD segment is projected to reach 17,095 million USD, accounting for 27.28% of the market share.
Table Global Automotive Usage-Based Insurance Market Size and Share by Type in 2024
Type | Market Size (M USD) 2024 | Market Share 2024 |
PAYD | 45571 | 72.72% |
PHYD/MHYD | 17095 | 27.28% |
5 Global Automotive Usage-Based Insurance Market Size and Share by Application in 2024
Embedded UBI: This application involves the integration of telematics devices directly into the vehicle’s system, providing detailed and accurate driving data. Embedded UBI is particularly popular among fleet operators and consumers who prioritize precision and reliability in their insurance coverage. In 2024, the Embedded UBI segment is projected to reach 20,600 million USD, representing 32.87% of the total market share. This growth is driven by the increasing adoption of connected vehicles and the availability of advanced telematics solutions.
App-based UBI: This application leverages smartphone technology to collect driving data, offering a cost-effective and accessible solution for consumers. App-based UBI is popular among individual drivers who prefer the convenience of using their existing smartphones rather than installing additional hardware. In 2024, the App-based UBI segment is expected to reach 42,065 million USD, accounting for 67.13% of the total market share. The growth of app-based UBI is supported by the widespread adoption of smartphones and the increasing availability of user-friendly mobile applications.
Table Global Automotive Usage-Based Insurance Market Size and Share by Application in 2024
Application | Market Size (M USD) 2024 | Market Share 2024 |
Embedded UBI | 20600 | 32.87% |
App-based UBI | 42065 | 67.13% |
6 Global Automotive Usage-Based Insurance Market Size by Region in 2024
North America: North America continues to dominate the UBI market, driven by technological advancements and a high adoption rate of telematics. In 2024, North America is projected to account for 36,234 million USD of the total market, representing 57.82% of the global market share. The region’s strong focus on innovation and consumer demand for personalized insurance solutions has been a key driver of growth.
Europe: Europe is another significant player in the UBI market, with a strong regulatory framework supporting the adoption of telematics and data-driven insurance solutions. In 2024, Europe is expected to account for 16,562 million USD of the total market, representing 26.43% of the global market share. The region’s emphasis on road safety and environmental sustainability has contributed to the widespread adoption of UBI.
Asia-Pacific: The Asia-Pacific region is experiencing rapid growth in the UBI market, driven by the increasing penetration of connected vehicles and the rising demand for personalized insurance products. In 2024, the Asia-Pacific region is projected to reach 8,129 million USD, accounting for 12.97% of the global market share. The region’s large and growing consumer base, coupled with technological advancements, is creating significant opportunities for UBI providers.
Figure Global Automotive Usage-Based Insurance Market Size by Region in 2024
7 Major Players in Global Automotive Usage-Based Insurance Market
7.1 Progressive Corporation
Company Profile: Progressive Corporation, founded in 1937 and headquartered in the USA, is one of the leading insurance providers in the United States. Known for its innovative approach to insurance, Progressive has been at the forefront of adopting new technologies and business models to enhance customer experience and operational efficiency.
Business Overview: Progressive Corporation operates through three main segments: Personal Lines, Commercial Lines, and Property. The company offers a wide range of insurance products, including personal and commercial auto insurance, residential property insurance, and other specialty property-casualty insurance services. Progressive’s Snapshot program is a pioneering example of UBI, where premiums are adjusted based on actual driving behavior, offering customers more personalized and often lower-cost insurance options.
Product Offered: Progressive’s Snapshot program uses telematics devices to monitor driving habits and adjust premiums accordingly. This program rewards safe driving with discounts, encouraging customers to adopt safer driving practices. In 2022, Progressive’s Gross Written Premiums (GWP) for UBI reached 8,154 million USD.
7.2 Allstate Insurance Company
Company Profile: Established in 1931, Allstate Insurance Company is one of the largest insurers in the United States. Headquartered in the USA, Allstate is known for its comprehensive range of insurance products and services, catering to both individual and commercial clients.
Business Overview: Allstate’s major business segments include private passenger auto and homeowners insurance, primarily offered through agencies. The company operates under several brand names, including Allstate®, Encompass®, and Esurance®. Allstate Financial provides life insurance, retirement, and investment products, as well as voluntary accident and health insurance. Allstate’s Drivewise program is a key offering in the UBI space, leveraging mobile app technology to monitor driving behavior and offer personalized insurance premiums.
Product Offered: Allstate’s Drivewise program is a mobile app-based solution that monitors driving behavior, offering rewards and potential premium discounts for safe driving. The program examines factors such as braking, speed, and driving times to provide real-time feedback and personalized rates. In 2022, Allstate’s GWP for UBI was 4,795 million USD.
7.3 State Farm
Company Profile: Founded in 1922, State Farm is one of the largest insurance providers in the United States. Headquartered in the USA, State Farm is known for its extensive network of agents and its commitment to customer service and community involvement.
Business Overview: State Farm offers a wide range of insurance products, including auto, fire, life, health, commercial policies, and financial services. The company’s mission is to help people manage the risks of everyday life, recover from the unexpected, and realize their dreams. State Farm’s Drive Safe & Save program is a notable example of its UBI offerings, leveraging telematics data to provide personalized insurance premiums based on driving behavior.
Product Offered: State Farm’s Drive Safe & Save program partners with Ford to offer telematics-based insurance. This program uses vehicle data to match premiums to the number of miles driven and rewards good driving behavior with potential discounts. The program aims to improve driving habits and reduce insurance costs for customers. In 2022, State Farm’s GWP for UBI was 3,491 million USD.