Usage-based Insurance Market Worth $125.7 Billion by 2027 - Exclusive Report by MarketsandMarkets™
CHICAGO, Feb. 20, 2020 /PRNewswire/ -- According to the new market research report "Usage-Based Insurance Market for Automotive by Package type, Technology type (OBD-II, Blackbox, Smartphone, Embedded, and Other technologies), Vehicle type, Vehicle age, Device Offering, Electric & Hybrid vehicles, and Region - Global forecast to 2027", published by MarketsandMarkets™, the Usage-Based Insurance Market is projected to reach USD 125.7 billion by 2027 from an estimated USD 24.0 billion in 2019, at a CAGR of 23.0% during the forecast period. The growth of the Usage-based Insurance Market is influenced by factors such as the increasing sales of telematics-equipped vehicles and government regulations on safety and telematics services. In addition, the anticipated increase in demand for connected cars and lower insurance premiums compared to regular insurance are expected to boost the market growth. Therefore, the Usage-Based Insurance Market is expected to witness significant growth in the future.
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Light-Duty Vehicle (LDV) is expected to lead the market during the forecast period
Light-duty vehicles constitute of passenger cars and light commercial vehicles. In 2018, these vehicles accounted for almost 95% of the total global vehicle sales, as per OICA. The adoption rate of UBI is higher in LDVs than HDVs. Light-duty vehicles can be easily fitted with OBD-II, black box, or other devices to access usage-based insurance plans. Additionally, as LDVs are generally driven by a single person, UBI plans based on driver behavior are ideal for this vehicle segment. The same is not true for HDVs as they have multiple drivers. Also, leading companies are developing various products and solutions for LDVs such as ride sharing and autonomous vehicles. For instance, in March 2018, Allstate partnered with Uber to protect drivers and passengers by offering commercial auto coverage. The partnership enabled Allstate to expand its leadership in personal transportation solutions into the commercial insurance market.
Embedded system segment is expected to be the fastest growing market
According to MarketsandMarkets analysis, embedded system is the fastest growing segment, by technology, of the Usage-Based Insurance Market owing to the increasing number of vehicles with embedded connectivity. In the current market scenario, OBD-II is widely used as OBD-II devices offer reliable data collection and have gained high customer acceptance. The market for embedded system-based UBI is directly related to the market for connected cars with built-in telematics. The market for connected cars is proliferating. However, the major market is concentrated in North America and Europe owing to their higher adoption rate of embedded systems.
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North America is expected to lead the market during the forecast period
North America is estimated to be the largest market for usage-based insurance owing to the high adoption rate of usage-based insurance in new and on-road vehicles equipped with telematics units. In 2017, according to the National Association of Insurance Commissioners (NAIC), about 80 percent of new car sales in the US were equipped with on-board telematics. In 2020, 70% of all auto insurers are expected to use telematics. Most of the cars sold in the US and Canada belong to the premium segment. The dominance of premium cars increases the adoption rate of usage-based insurance as their regular insurance is very high. With the help of usage-based insurance, vehicle owners can save up to 30% on insurance. In addition, the increasing number of companies offering hardware to avail usage-based insurance has also contributed to the growth of the market.
The Usage-Based Insurance Market is dominated by globally established players such as UnipolSai Assicurazioni S.p.A (Italy), Progressive Casualty Insurance Company (US), Allstate Insurance Company (US), State Farm Automobile Mutual Insurance Company (US), and Liberty Mutual Insurance Company (US).
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