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2020
Usage-based Insurance Market

Usage-Based Insurance Market

by Policy Type [Pay-As-You-Drive Insurance (PAYD), Pay-How-You-Drive Insurance (PHYD), and Manage-How-You-Drive Insurance (MHYD)], Technology (OBD-II-Based UBI Programs, Smartphone-Based UBI Programs, Hybrid-Based UBI Programs, and Black-Box-Based UBI Programs), Vehicle Age (New Vehicles and Used Vehicles), Vehicle Type (Light-Duty Vehicle (LDV) and Heavy-Duty Vehicle (HDV)): Global Opportunity Analysis and Industry Forecast, 2020-2027

Report Code: A01414
Pages: 193
Oct 2020 | 34133 Views
Author(s) : Pramod B, Vaibhav M , Vineet K
Tables: 107
Charts: 34
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COVID-19

Pandemic disrupted the entire world and affected many industries.

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Usage-Based Insurance Market Outlook- 2027

The global usage-based insurance market size was valued at $28.7 billion in 2019, and is projected to reach $149.2 billion by 2027, growing at a CAGR of 25.1% from 2020 to 2027. Usage-based insurance is a type of insurance policy where the premium of the policy is directly linked with the usage of the vehicle. This type of insurance is mainly available in developed countries owing to which majority of the key players of the market are expanding their business in developing countries of Asia-Pacific and LAMEA. Furthermore, insurers utilize UBI plans to align driving behavior of individuals with the premium charged by them. The telematics device—a system installed in the vehicles—monitors the speed, time, and distance covered by the vehicle, which is later transmitted to the insurance company, charging insurance premiums accordingly.

In wake of COVID-19, consumers are reevaluating traditional auto insurance policies and moving towards usage-based products, due to growth in work-from-home culture, decrease in short trips and need of mile-based coverage across the globe.

Growing adoption of usage-based insurance among the end user owing to its various features such as providing accurate and timely data collection methods and flexible insurance premiums boosts the growth of the global usage-based insurance market. In addition, factors such as higher possibility of the vehicle being recovered, in case of stolen, and lower fuel consumption have positively impacts the growth of the market. However, high installation cost of telematics and various data security issues are expected to hamper the market growth. On the contrary, adoption of advance technology such as smartphone-based UBI & hybrid-based UBI and increase in concerns regarding driver’s safety across the globe is expected to offer remunerative opportunities for the expansion of the market during the forecast period. Each of these factors is projected to have a definite impact on the growth of the usage-based insurance market.

Usage based insurance Market 2020-2027

By type, the usage-based insurance market was led by the pay-as-you-drive segment in 2019, and is projected to maintain its dominance during the forecast period. Encouragement to consumers to drive less and green is expected to increase the demand for PAYD insurance policies in the global market. However, the manage-how-you-drive segment is expected to grow at the highest rate during the forecast period, owing to technological advancement and rise in awareness among the youth is projected to attract many new consumers, which boost the global market.

Usage-Based Insurance Market
By Technology

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Blackbox technology accounted for the largest market share in 2019.

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Region wise, the usage-based insurance market was dominated by North America in 2019, and is expected to retain its position during the forecast period. This is attributed to flexible driving, roadside assistance and vehicle theft recovery. However, Asia-Pacific is expected to witness significant growth during the forecast period, owing to consumer awareness and major player of the market targeting developing countries of Asia-Pacific.

The report focuses on the growth prospects, restraints, and trends of global usage-based insurance market analysis. The study provides Porter’s five forces analysis to understand the impact of various factors such as bargaining power of suppliers, competitive intensity of competitors, threat of new entrants, threat of substitutes, and bargaining power of buyers on the global usage-based insurance market.

Usage-Based Insurance Market
By Policy Type

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Manage-how-you-drive is projected as one of the most lucrative segments.

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Segment review

The global usage-based insurance market is segmented into type, technology, vehicle age, vehicle type and region. In terms of type, the market is fragmented into pay-as-you-drive insurance (PAYD), pay-how-you-drive insurance (PHYD), and manage-how-you-drive insurance (MHYD). Depending on technology, it is bifurcated into OBD-II-based UBI programs, smartphone-based UBI programs, hybrid-based UBI programs, and black-box-based UBI programs. As per vehicle age the market is bifurcated into new vehicles and used vehicles. In terms of vehicle type the market is segmented into light-duty vehicle (LDV) and heavy-duty vehicle (HDV). Region wise, it is analyzed across North America, Europe, Asia-Pacific, and LAMEA.

The key players profiled in the usage-based insurance market analysis are Allianz SE, Allstate Corporation, Aviva, AXA, Insurethebox, Liberty Mutual Insurance, Mapfre S.A., Nationwide Mutual Insurance Company, Progressive Corporation and UNIPOLSAI ASSICURAZIONI S.P.A. These players have adopted various strategies to increase their market penetration and strengthen their position in the industry. 

Usage-Based Insurance Market
By Vehicle Age

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New Vehicles is expected to attain significant market share during the forecast period.

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COVID-19 impact analysis

The usage-based insurance market has witnessed significant growth in the past few years; however, due to the outbreak of the COVID-19 pandemic, the market is projected to witness a slight downfall in 2020. This is attributed to implementation of lockdown by governments in majority of the countries and the shutdown of travel across the world to prevent the transmission of virus. Therefore, to overcome these several challenges, insurers have established new developments in existing policies such as pay-as-you-drive, usage-based insurance, or telematics insurance as well as adopted technologies to enhance the claim processes and provide better user experience, despite the global health crisis.

Top impacting factors

Adoption of advanced technology in UBI 

New technology is anticipated to unfold attractive business opportunities for the UBI market. UBI programs are expanding owing to accurate & lower premium rates calculated through telematics device. Insurers have offered premium discounts to consumers to include other value-added services in their offerings. The discounted rate was aimed to gain consumer loyalty and strengthen its market presence. It made the insurance plans easy and convenient with decreased premium cost, which is anticipated to attract consumers, and generates new business opportunity for the insurers. 

Usage-Based Insurance Market
By Vehicle Type

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Light-Duty Vehicle (LDV) is expected to attain significant market share during the forecast period.

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Increasing concerns regarding driver’s safety across the globe

According to the data generated through Association for Safe International Road Travel (ASIRT), around 1.3 million people die in road crashes each year. It also states that 20–50 million people are injured or disabled. The increase in concern for driver safety is projected to gain consumers’ attraction with an increased demand. Young or teen drivers, who generally drive roughly, can be monitored through UBI program, reducing chances of accident. Their driving style are traced through the telematics device and further premiums are calculated on the same basis, which is providing lucrative opportunity for the market.

Usage-Based Insurance Market
By Region

2027
North America 
Europe
Asia-Pacific
LAMEA

Asia-Pacific would exhibit the highest CAGR of 27.6% during 2020-2027.

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Key Benefits For Stakeholders     

  • The study provides an in-depth analysis of global usage-based insurance market forecast along with the current & future trends to elucidate the imminent investment pockets.
  • Information about key drivers, restraints, and opportunities and their impact analysis on global usage-based insurance market is provided in the report.
  • Porter’s five forces analysis illustrates the potency of the buyers and suppliers operating in the industry.
  • The quantitative analysis of the market from 2020 to 2027 is provided to determine the market potential.

Key Market Segments

By Type 

  • Pay-as-you-drive (PAYD)
  • Pay-how-you-drive (PHYD)
  • Manage-how-you-drive (MHYD)

By Technology

  • OBD-II-based UBI programs
  • Smartphone-based UBI programs
  • Hybrid-based UBI programs
  • Black-box-based UBI programs

By Vehicle Age

  • New Vehicles 
  • Used Vehicles

By Vehicle Type

  • Light-Duty Vehicle (LDV)
  • Heavy-Duty Vehicle (HDV)

By Region

  • North America
    • U.S.
    • Canada
  • Europe 
    • Germany 
    • France
    • UK
    • Italy
    • Spain
    • Belgium
    • Rest of Europe
  • Asia-Pacific 
    • China
    • Japan
    • Australia
    • Singapore 
    • Thailand
    • Rest of Asia-Pacific
  • LAMEA
    • Latin America 
    • Middle East 
    • Africa

Key Market Players

  • Allianz SE
  • Allstate Corporation
  • Aviva
  • AXA 
  • Insurethebox 
  • Liberty Mutual Insurance
  • Mapfre S.A.
  • Nationwide Mutual Insurance Company
  • Progressive Corporation 
  • UNIPOLSAI ASSICURAZIONI S.P.A
 

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Insurance industry plays a major role in economic growth by providing financial protection to individuals, assets, and businesses against uncertain events. Hence, the business of insurance has become a massive contributor toward the development of a country. However, the auto insurance industry has been largely affected due to the outbreak of the COVID-19 pandemic leading to economic instability. Almost 40% of trips have been decreased, usage of public transportation for commuting to work reduced to 0%, and total distance of short trips has increased. All these factors reduce the need for insurance and drops the number of claims nearby to 50%, which is profitable for car insurance companies in short term only. However, in long term, it is expected to severely hit the market growth, owing to travel restrictions and less usage of vehicles, which imposes consumers not to take extra burden of premiums.

Increase in economic strength of the developing nations such as China and India is expected to provide lucrative opportunities for the market growth. North America occupied a major share in the auto insurance market in 2019, owing to the presence of major market players such as Allstate Corporation and Allianz. They are offering advanced coverages such as comprehensive, underinsured, and uninsured motorist, due to the extensive adoption of cars. Furthermore, technological advances such as telematics, including black box, navigation & direction, OBD2 devices, and other connected devices in vehicles, propel the growth of the market, by giving an opportunity to auto insurance companies to provide products linked to in-vehicle telematics along with the liability coverage. Moreover, emerging countries in Asia-Pacific and Latin America are projected to offer significant growth opportunities during the forecast period. The global players are focusing toward product development and increasing their geographical presence, owing to increase in competition among local vendors, in terms of features, quality, and price.
 

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