Global Automotive UBI Market to Reach US$270.3 Billion by 2032, Driven by Innovations from Progressive, Allstate, and Octo Telematics

The automotive usage-based insurance (UBI) market is undergoing one of the most transformative phases in its history, fueled by the increasing integration of telematics, rising adoption of connected vehicles, and the growing consumer demand for fair and personalized premium structures. According to Persistence Market Research, the global automotive usage-based insurance market is expected to reach US$ 69.8 Bn in 2025, and it is projected to rise at a remarkable CAGR of 21.3%, culminating in a valuation of US$ 270.3 Bn by 2032. This rapid market expansion reflects the automotive industry's shift toward data-driven insurance models where driver behavior, vehicle usage patterns, and real-time telematics insights become the foundation of premium calculation.

UBI models such as Pay-As-You-Drive (PAYD) and Pay-How-You-Drive (PHYD) are becoming increasingly popular because they allow insurers to offer more transparent and cost-effective plans. Leading segments include PHYD, which captures a dominant share due to its direct link with driver behavior analytics. North America leads the global market owing to its early telematics adoption, supportive regulatory framework, and strong presence of insurance technology innovators. Additionally, Europe and Asia Pacific are experiencing accelerated growth due to rising connected vehicle sales and widespread digital transformation within insurance ecosystems. UBI's capacity to reduce fraud, reward safe drivers, and optimize risk management continues to strengthen its global adoption trajectory.

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The key players studied in the report include:

Key players operating in the automotive usage-based insurance market include:

• Progressive Corporation
• Allstate Corporation
• State Farm Mutual Automobile Insurance Company
• Liberty Mutual Insurance
• Nationwide Mutual Insurance Company
• American Family Insurance
• Esurance (a subsidiary of Allstate)
• Metromile
• Root Insurance
• Aviva

Key Highlights from the Report

➤ Rising popularity of Pay-How-You-Drive (PHYD) insurance models driven by increased telematics integration in modern vehicles
➤ Strong adoption of UBI solutions across North America due to advanced insurance infrastructure and favorable regulatory norms
➤ Growing demand for cost-efficient, behavior-based premium models among young and high-mileage drivers
➤ Increasing deployment of smartphone-based telematics applications lowering the entry barriers for UBI adoption
➤ Enhanced risk assessment accuracy through real-time driving data analytics and predictive modeling
➤ Rapid expansion of digital insurance ecosystems integrating AI, cloud platforms, and IoT solutions

Automotive Usage-based Insurance Market Segmentation

By Type

• Pay-As-You-Drive (PAYD)
• Pay-How-You-Drive (PHYD)
• Pay-As-You-Go (PAYG)
• Manage-How-You-Drive (MHYD)

By Technology

• OBD-II-based UBI
• Smartphone-based UBI
• Black Box-based UBI
• Embedded System-based UBI
• Others

By Vehicle Usage

• New Vehicle
• Old Vehicle

By Vehicle Type

• Passenger Vehicles
• Commercial Vehicles

By Region

• North America
• Europe
• East Asia
• South Asia and Oceania
• Latin America
• Middle East and Africa

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Regional Insights

North America remains the leading region in the global UBI market due to early adoption of telematics-based insurance models and strong involvement from major insurers in the U.S. and Canada. The region benefits from advanced digital ecosystems, widespread connected vehicle usage, and a regulatory environment that supports data-driven insurance innovation. Europe closely follows, driven by safety norms, telematics adoption in premium vehicles, and insurance companies focusing heavily on reducing claim-related losses through behavioral insights. Countries such as the U.K., Italy, and Germany rank among the fastest adopters of PHYD insurance models.

Asia Pacific is emerging as a high-growth region, fueled by rising vehicle sales, maturing insurance markets, and rapid digitalization across China, India, Japan, and Southeast Asia. The region's expanding young driver population and growing interest in cost-sensitive insurance products are accelerating UBI uptake. Meanwhile, Latin America and the Middle East show increasing interest in telematics-enabled policies as insurers recognize the benefits of risk segmentation and fraud mitigation. These regions are expected to contribute significantly to long-term global UBI market expansion.

Market Drivers

One of the strongest market drivers is the growing penetration of telematics technologies in vehicles globally. Connected vehicles equipped with advanced sensors and communication capabilities are generating vast amounts of data that insurers can use to assess driving behavior, improving the accuracy of premium calculations. Consumers increasingly prefer fair pricing models, especially young drivers seeking lower insurance costs based on responsible driving habits. This shift toward personalized insurance solutions supports the growth of usage-based insurance. Additionally, rising awareness about safe driving practices and demand for transparency in insurance pricing are further reinforcing UBI adoption across consumer and commercial segments.

Another major driver is the insurance industry's ongoing digital transformation. Insurers worldwide are adopting artificial intelligence, IoT, and Big Data analytics to optimize underwriting processes. UBI products align seamlessly with this transformation by offering real-time insights and enabling insurers to reduce fraudulent claims and improve risk assessment accuracy. Fleet operators, logistics companies, and mobility service providers are also showing strong interest in UBI due to its potential to reduce operational expenses and enhance driver monitoring. As governments in multiple regions introduce supportive telematics and road safety regulations, the UBI market is expected to continue expanding at a rapid pace.

Market Restraints

Despite robust market growth, several restraints challenge the widespread adoption of automotive usage-based insurance. One of the primary concerns revolves around data privacy and security. As UBI relies heavily on tracking driving behavior and real-time vehicle usage, consumers often express concerns regarding who controls their data and how it is used. Regulatory complexities across different regions add another layer of difficulty, particularly where data protection laws are stringent. Insurers must ensure secure data handling practices to maintain consumer trust and comply with evolving legal standards.

Another restraint is the relatively high initial cost of implementing telematics systems, especially for smaller insurers or vehicle owners who require specialized hardware installation. In some markets, consumers remain unfamiliar with UBI concepts, preferring traditional insurance products due to habit or lack of awareness. Limited digital infrastructure in certain developing economies also hinders the expansion of UBI solutions. Additionally, inconsistent telematics performance due to poor network connectivity can affect the accuracy of usage-based assessments, posing operational challenges for insurers aiming to maintain fairness and transparency.

Market Opportunities

The automotive usage-based insurance market is poised to benefit greatly from rising global adoption of connected and autonomous vehicles. As vehicles become smarter and more integrated with digital ecosystems, insurers gain access to richer datasets for risk assessment, enabling the development of highly personalized policies. This trend opens opportunities for insurers to collaborate directly with automotive OEMs to create embedded insurance models that activate automatically when purchasing a connected vehicle. Such partnerships can enhance customer experience and strengthen insurer loyalty.

The expanding mobility-as-a-service (MaaS) ecosystem presents additional opportunities, as ride-hailing companies, rental agencies, and shared mobility fleets increasingly require dynamic insurance models tailored to real-time usage. Telematics-based UBI can significantly reduce operational costs for fleet operators while improving safety through driver performance monitoring. Furthermore, rapid digitalization in emerging markets offers substantial potential for insurers to introduce smartphone-based UBI programs that are cost-effective and easy to adopt. As consumer demand shifts toward value-driven insurance and governments encourage safer road environments, usage-based insurance is set to evolve into a mainstream global offering.

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Recent Developments:

Several leading insurers expanded their partnerships with telematics service providers to launch next-generation behavior-based policies utilizing AI-driven analytics.
Major global insurance companies introduced smartphone-only UBI programs aimed at simplifying onboarding and enhancing accessibility for younger drivers.

Frequently Asked Questions

➤ What are the main factors influencing the automotive usage-based insurance market from 2025 to 2032?
➤ Which companies are the major sources in the automotive usage-based insurance market?
➤ What are the market's opportunities, risks, and general structure in the automotive usage-based insurance market?
➤ How do the top automotive usage-based insurance market 2025-2032 companies compare in terms of sales, revenue, and prices?
➤ How are market types, applications, deals, revenue, and value explored in the automotive usage-based insurance market?

Future Opportunities and Growth Prospects

The future of the automotive usage-based insurance market is highly promising as connected vehicle technologies mature and digital insurance ecosystems expand. Growing global interest in personalized insurance, combined with rising telematics adoption, will continue driving innovation across PAYD, PHYD, and emerging MHYD models. Insurers that invest in advanced analytics, cloud-based telematics, and strategic partnerships with automotive manufacturers are expected to lead the next growth phase. Additionally, markets in Asia Pacific, Latin America, and the Middle East represent untapped potential for smartphone-based UBI solutions that cater to cost-sensitive consumers. As risk management becomes increasingly data-driven, usage-based insurance will play a central role in shaping the future of global automotive insurance.

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