Automotive Usage-Based Insurance Market size is set to grow by USD 67.51 bn from 2024-2028, flexible pricing schemes of automotive ubi boost the market- Technavio

NEW YORK, April 5, 2024 /PRNewswire/ -- The global automotive usage-based insurance market size is estimated to grow by USD 67.51 bn from 2024-2028, according to Technavio. The market is estimated to grow at a CAGR of 25.1% during the forecast period. The automotive Usage-Based Insurance (UBI) market offers alternatives to traditional auto insurance with pricing based on driving behavior, vehicle age, and usage. UBI models include black-box, smartphone, and hybrid systems, providing pay-as-you-drive, pay-how-you-drive, and manage-how-you-drive options. Data security and privacy concerns are addressed through advanced technology, blockchain, and smartphone-centric solutions. New and used vehicles, light-duty and heavy-duty vehicles, businesses, and assets are protected through data-driven solutions. 

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Segment Overview 

This automotive usage-based insurance market report extensively covers market segmentation by Application (Embedded UBI, App-based UBI) Pricing Scheme (PHYD, PAYD, MHYD) Geography (Europe, North America, APAC, Middle East and Africa, South America)

Market segmentation by Application

The Automotive Usage-Based Insurance (UBI) market is experiencing significant growth in the rapidly evolving automotive industry. Connected cars and on-road vehicles are equipped with telematics devices, enabling insurance companies to collect real-time data on consumer driving behavior. State regulations and data privacy concerns are key considerations for insurers implementing UBI programs, which include Pay-as-you-drive (PAYD), Pay-how-you-drive (PHYD), and Manage-how-you-drive (MHYD). Machine learning and predictive modeling technologies, utilized by big data companies and cloud service providers, analyze telematics data from connected cars to assess risk and personalize insurance policies. UBI programs use black boxes, OBD-II devices, smartphones, and other telematics solutions to monitor vehicle performance, location tracking, fuel consumption, and driver safety. Insurers can prevent fraudulent claims, recover stolen vehicles, and offer vehicle recovery services. However, data security issues and privacy regulations pose challenges for UBI providers. Telematics companies are collaborating with traditional insurance businesses to offer UBI programs for passenger cars, commercial vehicles, and mobility-as-a-service. Smartphone-based, hybrid-based, and black-box-based UBI programs continue to evolve, providing advanced technology solutions for safer and more efficient driving.

Geography Overview

The Automotive Usage-Based Insurance (UBI) market in Europe is dominated by policyholders seeking financial protection for their passenger cars and commercial vehicles. Data privacy regulations are a significant concern, with telematics data collected via black boxes, OBD-II devices, smartphones, and hybrid systems. Traditional insurance companies compete with telematics companies, offering Pay-as-You-Drive (PAYD), Pay-How-You-Drive (PHYD), and Manage-How-You-Drive (MHYD) insurance programs. Location tracking helps with vehicle recovery in case of theft, while fuel consumption data aids in reducing emissions. Advanced technology, including blockchain and smartphone-centric solutions, addresses data security issues. Consumer driving behavior analysis leads to lower premiums and improved driver safety. Vehicle age, new or used, and vehicle type, including light-duty vehicles (LDV) and heavy-duty vehicles (HDV), influence market trends. The insurance industry embraces data-driven solutions, collecting telematics data to offer customized policies and prevent fraudulent claims. 

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• Usage-based insurance (UBI) in the automotive sector utilizes telematics and tracking to assess driving behaviors of policyholders. New and used vehicles, LDV and HDV, are monitored for safe driving habits, trip characteristics, and vehicle condition. Insurers benefit from reduced claims and improved driver advice. Data collection includes vehicle age, location, weather, and operation type. Privacy concerns are addressed through blockchain technology and smartphone-centric solutions. Financial protection and asset management are key benefits for businesses and individuals during uncertain events. Machine learning and predictive modeling technologies are used by insurers and big data companies in the cloud.
• The automotive Usage-Based Insurance (UBI) market faces complexities due to data management needs, confidential data sharing, and increasing telematics costs. Key players include insurers, telematics companies, and technology providers. UBI solutions include black box, smartphone-based, and hybrid models, focusing on consumer driving behavior, fuel consumption, and vehicle recovery. Challenges include data privacy, security, and cost concerns, as well as regulatory compliance. Market growth relies on data pooling and advanced technologies like machine learning and predictive modeling.

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Research Analysis

The Automotive Usage-Based Insurance (UBI) market is a significant segment of the insurance industry, particularly in the context of connected cars and telematics. This market utilizes telematics devices installed in on-road vehicles, including passenger cars and commercial vehicles, to collect data on consumer driving behavior. Insurance companies leverage this data to offer personalized insurance policies based on real-time driving patterns. Connected car services, such as location tracking and fuel consumption monitoring, enable insurers to assess risk more accurately. However, data security issues are a concern, necessitating advanced technology to protect sensitive telematics data. State regulations play a crucial role in shaping the UBI market. Traditional insurance businesses are adapting to this advanced technology, offering telematics insurance policies to better manage risk and fraudulent claims. Moreover, the emergence of mobility-as-a-service and smartphone-based UBI is expanding the market's reach beyond conventional vehicle ownership. In summary, the Automotive UBI market is transforming the insurance landscape by providing personalized policies based on real-time driving data, enhancing vehicle security, and fostering innovation in the automotive and insurance industries.

Market Research Overview

The Automotive Usage-Based Insurance (UBI) market is a growing segment in the insurance industry. Telematic devices, such as black boxes and smartphone applications, are used to collect data on driving behavior, including speed, location, and braking patterns. This data is then analyzed to determine insurance premiums, with safer drivers receiving lower rates. UBI programs offer several benefits, including personalized pricing based on individual driving habits and potential cost savings for safe drivers. However, privacy concerns and the potential for misuse of data are valid concerns that must be addressed. The future of UBI lies in the integration of advanced technologies, such as machine learning and artificial intelligence, to provide more accurate and personalized insurance offerings. Ultimately, UBI has the potential to revolutionize the insurance industry by promoting safer driving and providing more affordable insurance options for consumers.

Table of Contents:

1 Executive Summary
2 Market Landscape
3 Market Sizing
4 Historic Market Size
5 Five Forces Analysis
6 Market Segmentation

• Application
• Embedded UBI
• App-based UBI
• Pricing Scheme
• PHYD
• PAYD
• MHYD
• Geography
• Europe
• North America
• APAC
• Middle East And Africa
• South America

7 Customer Landscape
8 Geographic Landscape
9 Drivers, Challenges, and Trends
10 Company Landscape
11 Company Analysis
12 Appendix

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SOURCE Technavio