Usage-based Insurance Market Heads Above USD 95.81 Billion at a CAGR of 18.95%, from 2018 to 2025 – Report by MarketsandMarkets™

October 11 02:15 2018

The usage-based insurance market consists of companies such as Progressive Corporation (US), Vodafone (UK), Allstate (US), Octo Telematics (UK), TomTom (Netherlands), Allianz (Germany), AXA (France), Liberty Mutual (US), Verizon (US), and Sierra Wireless (Canada).

The report defines, describes, and forecasts the global usage-based insurance market by Package, Technology, Vehicle Age, and region. It also offers a detailed qualitative and quantitative analysis of the market. The report provides a comprehensive review of the major market drivers, restraints, opportunities, and challenges. It also covers various important aspects of the market.

The Usage-Based Insurance Market for automotive is estimated to be USD 28.43 billion in 2018 and is projected to reach USD 95.81 billion by 2025, at a CAGR of 18.95%. The growing market for connected cars services, increasing regular vehicle insurance, and increased customer acceptance of connected services will drive the market for usage-based insurance.

Usage-based insurance providers should focus on open platforms for integration of any application. For instance, Octo Telematics launched its Next Generation Platform (NGP), a business and technology investment of more than USD 40 million. The platform provided open access and seamless integration of any Application Programming Interface (API) as well as a fully-modular insurance telematics structure, offering flexibility through mix-and-match service selection. The development of the platform as an IoT ecosystem provided innovators the scope and ability to meet the rapidly growing global demand for user-based insurance. Hence, usage-based insurance providers should focus on such platforms having huge market demand across the world, especially Europe and the Americas.

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Usage-based Insurance Market Target Audience

  • Automotive cloud service providers
  • Automotive electronics hardware and software suppliers
  • Automotive insurance platform providers
  • Automotive insurance providers
  • Automotive Original Equipment Manufacturers
  • In-vehicle telematics service providers
  • Regional automotive insurance associations


Manage-how-you-drive or MHYD is the fastest growing usage-based insurance market by policy type. MHYD is an extended version of PHYD which provides feedback to drivers on improvement areas besides just ranking them based on driving behavior. This model is very much applicable for young drivers aged between 18 and 25 as they are inexperienced. The MHYD system works similar to a PHYD by collecting various driving behavior information such as harsh braking, sharp cornering, and overspeeding to rate the driver. The system also suggests improvements to the driver to help improve the driving behavior and ultimately reduce insurance premium. UBI companies can work together with telematics device manufacturers, insurance companies, and OEMs to develop MHYD plans that suit the requirements of different customers.

Critical Questions:

  • When Asia Oceania going to be a mass adoption market for usage-based insurance?
  • Which package type is going to dominate in the future?
  • How are the industry players addressing the challenge of data privacy and standardized systems?


Embedded system is projected to be the fastest growing usage-based insurance market by technology. Embedded refers to the use of inbuilt vehicle telematics to analyze and offer UBI services. With the growth in vehicle technology, connected cars are becoming prevalent. Connected cars offer various features which enable the use of telematics and infotainment services using the telematics device (telematics control unit). The inbuilt telematics is used to collect vehicle data and analyze the driving behavior to calculate insurance premiums. Embedded telematics is very accurate at capturing vehicle data as it is an integrated part of the system and does not require external calibration to register data. UBI providers can work directly with OEMs to capitalize on the increasing trend of connected cars in developed regions like the Americas and EME and also in developing markets such as Asia Oceania where the penetration of connected cars with embedded systems is increasing rapidly. UBI service providers can also provide plans specific for embedded systems which will give connected car owners further incentive to opt for UBI policies.   

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