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Usage-based Insurance Market with Geographic Segmentation, Statistical Forecast and Competitive Landscape Report to 2026

Author : Ronak Bora | Published Date : 2020-08-25 

Usage-based Insurance (UBI) market is projected to surpass USD 115 billion by 2026. The market growth is attributed to the steadily growing uptake of UBI platforms by insurance companies to accurately track driving patterns and align insurance premiums with the estimated risks. Insurance companies are increasingly partnering with solution providers to leverage embedded telematics solutions to increase profitability. For instance, in September 2017, Car Security adopted CalAmp's telematics technology stack and CrashBox vehicle risk management services platform to streamline its connected car offerings. Under the partnership, CalAmp offers insurance companies with telematics tools to optimize the claim management process. Furthermore, usage-based insurance is helping insurance companies in promoting safe driving habits among young customers through incentives & rewards for responsible driving and adequate car maintenance.

Some major findings of the usage-based insurance market report include:

The automotive sector is witnessing a dynamic change in the technology landscape due to which an increasing number of automobile manufacturers are focusing on integrating IoT and in-vehicle communications systems into vehicles

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To avail insurance, sophisticated onboard communication devices are providing real-time connectivity between vehicle and insurance companies, enabling them to remotely diagnose vehicle breakdown problems

Device-based PAYD solutions, such as odometers, OBD dongles, and smartphones, are witnessing a rise in adoption to gather information to determine driving behavior, fuel efficiency, and road conditions

Cloud-based telematics platforms are witnessing a rapid adoption, aiding insurers in quick & cost-effective implementation of usage-based products for their customers

The increased penetration of smartphones will contribute to the market growth of UBI as users can easily access UBI apps through phones and measure their driving skills

Some of the leading market players in the market are AXA, Allstate, Sierra Wireless, State Farm, Allianz, Liberty Mutual, Nationwide, Desjardins Group, UnipolSai, Progressive, Generali, Octo, Metromile, Vodafone Automotive, Mapfre S.A, Zubie, TomTom, Insure The Box, IMS, Cambridge Mobile Telematics, Danlaw, etc.

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Insurance providers are focusing on strategic collaborations and long-term contracts with automotive manufacturers to gain market share

The Pay-How-You-Drive (PHYD) insurance package held a major market share of over 70% in 2018 and is expected to continue its dominance over the forecast timespan. This is attributed to the increasing popularity of PHYD among customers to reduce insurance premiums. Traditional insurance models were based on past driving history, whereas PHYD insurance focuses on present driving behavior to fix insurance premiums. Customers are leveraging this policy to reduce careless driving and are increasingly adopting safe driving practices to earn rewards & incentives. The PHYD policy is also beneficial to insurance providers as it reduces unanticipated fraudulent cases & accident risks and lowers insurance claims. The integration of other connected services, such as vehicle wellness reports and theft insurance programs, with PHYD packages, will further augment market growth.

The smartphone segment is anticipated to register the fastest growth with a CAGR of nearly 35% from 2019 to 2026 due to the rapid proliferation of smartphone devices and ease of use. Customers are reaping the benefits of telematics solutions installed on their smartphones to evaluate their driving style and make necessary modifications to reduce high premiums. Insurance companies are partnering with software solution providers to offer smartphone-based telematics insurance programs to remain competitive. In August 2018, the NJM Insurance Group selected IMS for its new smartphone-based insurance telematics program. NJM leverages IMS' smartphone telematics to promote safety among customers by applying driver scoring and offering rewards to safe drivers.

The passenger vehicles segment held a major market share of nearly 85% in 2018 due to the surging sales of new passenger vehicles. As the automotive landscape is continuously changing with the introduction of next-generation technologies, the demand for passenger cars equipped with advanced telematics-based platforms to monitor driving habits & prevent any sudden failures is increasing several-fold. According to the January 2017 report published by the European Commission, nearly 90% of the new car sales in 2020 will include embedded telematics packages. As multiple automotive manufacturers are partnering with technology providers to promote the adoption of connected cars, the passenger car segment is expected to benefit significantly.

Asia Pacific is set to witness a lucrative growth of over 26% CAGR from 2019 to 2026 due to the growing demand for telematics solutions in the region. The increasing focus of insurance providers on telematic technologies, especially in China and Japan, is driving the adoption of UBI policies across APAC. Commercialization of UBI technologies in the developing economies, such as India, Thailand, and Vietnam, will further proliferate market growth. The automotive manufacturers in the region are collaborating with insurance providers to develop customer-centric insurance products for their vehicles. For instance, in 2017, Toyota along with MS & AD Insurance Group's Aioi Nissay Dowa Insurance jointly introduced Japan's first driving behavior-based telematics automobile insurance. With the growing penetration of UBI solutions in the automobile industry to offer better fleet management, the APAC UBI market will drive the overall market growth.

Companies operating in the UBI market are focusing on various business growth strategies, including investments in new telematics solutions, strengthening partner networks, and geographical expansion. Through such strategic moves, companies are trying to gain a broader market share and maintain their leadership in the market. For instance, in October 2018, ThingCo, an insurance company, partnered with Tk.cn to offer telematics-based motor insurance to drivers in China. Furthermore, insurance companies are designing new insurance policies to meet customer requirements in collaboration with automakers & telematics solution providers. For instance, in September 2016, Generali and Progressive entered into a collaboration to research & develop customized car telematics solutions. The new solutions offered rewards to safer drivers and helped them improve their driving habits through personalized customer feedback.

About Author

Ronak Bora

Ronak Bora

A graduate in Electronics Engineering, Ronak writes for fractovia and carries a rich experience in digital marketing, exploring how the online world works from a technical and marketing perspective. His other areas of interest include reading, music, and sport. [email protected] | https://twitter.com/RonakBora26

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