Automotive Usage Based Insurance Market Growing at 26% CAGR to be Worth USD 124.02 Billion by 2027: COVID-19 Impact and Global Analysis by The Insight Partners

The automotive insurance sector is catalyzing across the world due to recent developments. A number of auto insurers have been emerging in the automotive usage-based insurance market every year. They offer a wide variety of insurance policies such as pay-as-you-drive (PAYD) and pay-how-you-drive (PHYD). The former calculates insurance premium depending on vehicle mileage and stipulated time. While the PHYD policy is entirely a function of driving pattern or behavior. It promotes lenient and smooth driving on the road. Thus, third-party traveling services and variety of auto insurances bolster the global automotive usage-based insurance market.

According to The Insight Partners' research, the global automotive usage-based insurance market accounted for US$ 15,617.8 million in 2018 and is anticipated to hit US$ 105,118.8 million by 2027 to rise at an annual growth rate of 23.6% from 2019 to 2027. The significant adoption of mobility-as-a-service (MaaS) and a wide variety of insurance premiums are the potential factors stimulating the market expansion.

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According to policy type, the global automotive usage-based insurance market is split into pay-as-you-drive (PAYD) and pay-how-you-drive (PHYD). The latter occupied 73.3% market share in 2018, amassing US$ 11,449.5 million. It is forecasted to accrue US$ 73,694.4 million by 2027 to grow at 23.0% CAGR along the forecast period.

From the regional point of reference, it has been observed that North America captured 46.4% market share in 2018 with a revenue total of US$ 7,245.1 million. It is likely to reach US$ 44,454.7 million by 2027 to surge at 22.4% CAGR during the forecast period. The Asia Pacific market was evaluated at US$ 1,711.4 million in 2018 and is predicted to hit US$ 13,570.8 million by 2027.

Key players dominating the global automotive usage-based insurance market are Allstate Insurance Company; Allianz SE; Metromile, Inc.; Octo Telematics S.P.A.; Vodafone Automotive S.P.A.; Axa SA; Ingenie Services Limited; Liberty Mutual Insurance Company; Tomtom Telematics BV; Sierra Wireless, Inc; and Unipolsai Assicurazioni S.P.A., among others.
• In August 2017, Allstate Canada introduced a usage-based insurance program in Nova Scotia to expand its insurance business. The program offers reduced rates and special discounts to the drivers for safe rides.

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• In December 2017, Allianz SE extended the partnership with Marmalade, a special telematics provider. They jointly offer a smart digital customer interaction platform with enhanced user experience through app and portal.
• In September 2017, Metromile entered into a strategic partnership with JLT Re, a global reinsurance and brokerage company to pioneer reinsurance agreement and take necessary steps for future growth.
• In July 2018, Tokio Marine Holdings and Intact Financial Corp invested US$ 90 million in Metromile Inc to expand the business across different geographies and enhance the customer base.

A considerable chunk of travelers worldwide is no longer willing to own the vehicles to avoid messy traffic instances. This has led to the rise of other transit practices such as car-sharing and ride-hailing in both developed and developing economies. These practices are called mobility-as-a-service, as the customer avails the vehicle and driver from third-party service providers. This service makes substantial use of transportation infrastructure. Due to increasing traction of MaaS, the service providers are procuring more vehicles to expand the business. This surged the demand for telematics service providers (TSP) and auto insurers. The prominent MaaS providers are Uber, Lyft, Zipcar, Car2go, Beeline Singapore, Ubigo AB, and Smile Mobility, among others.

Contrastingly, the lack of telematics insurance awareness in emerging countries hinders the growth of global automotive usage-based insurance market.
Based on technology, the automotive usage-based insurance market sphere is divided into smartphones, black boxes, dongles, and others. The dongles segment led the market in 2018 with 36.6% share of the business. It generated US$ 5,723.7 million in 2018 and is estimated to garner US$ 33,254.9 million by 2027 to expand at 21.6% CAGR during 2019-2027. However, it is projected to lose its dominance to the black box segment by 2027. Though the black box market stood at the valuation of US$ 5,368.3 million in 2018; it is expected to reach US$ 34,613.2 million by 2027 with a stellar annual growth rate of 23.1% during the forecast period.

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