ALBANY, New York, May 22, 2019 /PRNewswire/ -- The global usage-based insurance market is witnessing a smooth growth at expected 30% CAGR during 2019-2027. The market depicts a fragmented and competitive landscape. The rising perception of vehicles as a liability and growing trends such as rent-a-vehicle are expected to drive significant growth of the usage-based insurance (UBI) market in the near future. Some key global players in the market are AllState Insurance Company, Progressive, AA, AXA, Uniqa, Allianz, Groupama, Generalli, MAIF.
The usage-based insurance (UBI) market is likely to evolve as the next frontier in the global insurance market. According to recent studies, usage-based insurance provides incentives for good drivers and is ideal for coupling with next-generation technologies like vehicle automation and sensors. Usage-based insurance rewards good drivers and women are more likely to opt for this current alternative form of insurance.
Additionally, younger men are more likely to adopt it and improve their driving performance after purchasing it. Hence, the usage-based insurance market embeds a great potential to bring the consumer, automakers, and public entities concerned with road safety on the same page. Many usage-based insurance (UBI) market players share data and negative feedback with consumers, significantly improving their performance in the long run.
Based on these trends, the usage-based insurance (UBI) market is expected to reach US$200 Bn by 2027 end. The market is segmented in various categories based on policy types. PAYD or pay-as-you-drive is the most widely demanded policy type in the market. The PAYD model enables young people or many first timers to take out luxurious sports vehicles for short duration trips. The transparency in the system in relation to data about sudden breaking, acceleration, and flexibility regarding driving experience makes it an attractive proposition.
Region wise, the usage-based insurance (UBI) market is expected to register the highest growth in North America with an astounding CAGR of 49.0%. Moreover, countries like South Africa and Italy are witnessing a remarkable penetration of the UBI model. The high costs of insurance in these countries, and newly introduced pilot programs are expected to drive growth of the usage-based insurance market further.
Rising Costs of Owning Vehicles Drives the Usage-based insurance market
Technological advances and growing perception of vehicles as liabilities due to uncertainties in fuel prices amidst economic slowdowns are good news for the usage-based insurance (UBI) market. Rising number of consumers do not wish to see purchases and bear the burden of owning vehicles. For example, in one of the largest auto markets in the world, India, recently, one of India's biggest automakers, Mahindra, launched a scheme to directly rent vehicles from the company. Additionally, infrastructure woes in developing countries, and rising demand for sustainable and energy efficient like public transit systems also increases reluctance to purchase vehicles. Rising demand for usage-based insurance policies, growing costs of owning vehicles, and future horizon of energy conservation are main factors behind the growth the usage-based insurance (UBI) market.
Premium Experiences and Reliable Alternatives to Drive Growth
Renting vehicles provides premium experiences such as trying several vehicles within a short span of time, a fascination in emerging markets. Emerging markets are currently driving the super sports car segment alone, as the car sales continue to drop in developed markets. Additionally, owning a vehicle is not a necessity in most parts of the world where public systems are often reliable alternatives. Hence, for daily commute the demand for luxury vehicles is expected to remain limited due to growing investment in infrastructure worldwide. Moreover, the rent-a-vehicle trend brings in transparency and trust between consumers and rented vehicle owners, leading to more cost-efficiency and productivity. These factors are expected to result in remarkable growth in the usage-based insurance market in the near future.
The study presented here is based on a report by Transparency Market Research (TMR), titled, usage-based insurance (UBI) market (Policy Type - Pay-How-You-Drive (PHYD), Pay-As-You-Drive (PAYD), Manage-How-You-Drive (MHYD); Device Type - Black Box, OBD Dongle, Smartphone; Vehicle Type - Passenger Vehicle, Commercial Vehicle) - Global Industry Analysis, Size, Share, Growth, Trends, and Forecast, 2019 – 2027.
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