Usage-based Insurance Market projected to show strong growth - Key Players Progressive Insurance, Allstate, State Farm, Allianz-Tiriac Asigurari, Liberty Mutual Insurance, Nationwide, Vodafone Automotive, Generali, MAPFRE, Metromile

UBI market is expected to witness a sharp growth over the forecast timeline owing to the rapid development and adoption of connected cars. These cars are equipped with sensors that monitor miles driven, location, route, driver’s behaviour, and vehicle data including the temperature and tire pressure.

Usage-based Insurance (UBI) market is projected to surpass USD 107 billion by 2024. The growing implementation of vehicle telematics to improve driving behavior and align car insurance premiums with the actual vehicle condition via UBI has accelerated the automotive insurance industry’s profitability. UBI relies on telematics data to evaluate risks based on each individual driving behavior, inclination towards safe driving practices, the current condition of vehicles and trip characteristics. By combining these factors with the traditional rating metrics, it enables insurers to offer the best drivers with a maximum discount and provides value-added services to serve customer interests more effectively.

It also allows drivers to control the cost of their insurance by paying how they drive and provides them with a way to monitor real-time vehicle data. UBI enables the detection of stolen vehicles through a GPS in the telematics device connected to the vehicle and lowers the chances of vehicle accidents by monitoring the drivers behavior. These factors are expected to augment the demand for UBI.

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The commercial vehicles segment is estimated to show the fastest growth rate of over 18% from 2018 to 2024 due to the adoption of telematics and other vehicular technologies to support the growth of the commercial vehicle transportation industry. Commercial vehicles leverage these technologies to increase the driving efficiency via real-time communications. Transportation companies can share the telematics data with the insurance companies and help them in setting premium rates and discounts for customers based on their driving behavior records.

Company profiled in this report based on Business overview, Financial data, Product landscape, Strategic outlook & SWOT analysis:

• Progressive
• Allstate
• State Farm
• AXA,
• Allianz
• Liberty Mutual
• Nationwide
• Vodafone Automotive
• UnipolSai
• Generali

The OBD-II technology held a major market share of around 50% in 2017 and is projected to dominate the market between 2018 and 2024. Earlier OBD devices were used to read fault codes and parameters associated with the malfunctioning of the emission systems. But with the growing trend of IoT, OBD dongles embedded with sensors are being used to detect hard breaks and accelerations, thus determining driving patterns, fuel efficiency, and road conditions. As these dongles are easy to install, they are being widely used for tracking the vehicle’s systems and the driving pattern.

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UBI helps in improving driver safety and reducing accidents by encouraging safe driving practices with a real-time feedback. Also, it provides fleet managers with deep insights about the drivers behavior, along with the fleet operating data that ensures safer fleet operations.

UBI market is expected to witness a sharp growth over the forecast timeline owing to the rapid development and adoption of connected cars. These cars are equipped with sensors that monitor miles driven, location, route, driver’s behavior, and vehicle data including the temperature and tire pressure. This data is then used by the insurers to influence driving behavior, increase claim-processing efficiency, and lower insurers losses by enabling the detection of fraudulent claims.

Other factors driving the UBI market growth are the penetration of insurance telematics in passenger & commercial vehicles and the growing trend of Try-Before-You-Buy (TBYB) insurance packages. The TBYB model allows drivers to use a smartphone application that gathers data, enabling insurers to analyze risks before insuring the driver. The new solution also enables policy-holders to make sure that the policies are tailored according to their needs.

The PHYD segment is projected to hold a major market share of around 66% by 2024. PHYD insurance aims at charging premiums according to an individual driving habits, which help insurers to offer premiums that are more tailored to individual drivers. The insurers can set the rates based on driving skills and the time from when the user is most likely to be driving. Many insurers also share data with their clients to allow them to monitor their own driving behavior.

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North America is projected to hold a dominant share of around 38% in the UBI market by 2024. The market growth is driven by an increase in the use of telematics systems that are equipped with features such as vehicle tracking systems, remote theft alarm, and driver assistance systems. The rising incidents of vehicle theft in this region are expected to augment the UBI market growth. According to the Insurance Information Institute, in 2017, around 773,139 vehicles were stolen in the U.S. as compared to 767,290 vehicles in 2016.

The adoption of telematics-driven UBI helps insurers to improve profitability and reduce fraudulent claims. A massive growth of the connected cars market and an increased use of smartphone telematics for monitoring driver behavior will accelerate the UBI market growth over the forecast timeline.

The companies operating in the UBI market are introducing new products to cater to the needs of the passenger vehicle drivers and fleet managers. For instance, in October 2018, Autonet launched a UBI private car product for drivers using Soundtrack’s video telematics solutions. This solution monitors the driving behavior and checks factors such as where the vehicle was driven and where it was kept overnight that can affect the insurance policy.

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