According to a new market research report "Usage-Based Insurance Market for ICE & Electric Vehicle by Package (PAYD, PHYD, MHYD), Technology (OBD-II, Smartphone, Embedded System, Black Box), Vehicle Age (New, On-Road), Device Offering (BYOD, Company Provided), and Region - Global Forecast to 2025", published by MarketsandMarkets™, the market for automotive is estimated to be USD 28.43 billion in 2018 and is projected to reach USD 95.81 billion by 2025, at a CAGR of 18.95% from 2018 to 2025. The increasing number of vehicles with telematics and connected car services and a reduction in insurance premiums as compared to regular insurance are projected to drive the Usage-Based Insurance Market.
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Pay-As-You-Drive (PAYD) package type is projected to have the largest market in the Usage-Based Insurance Market
Pay-As-You-Drive (PAYD) package type is estimated to be the largest market for usage-based insurance, by package type, during the forecast period. Various factors affecting the dominance of PAYD are ease of deployment, no complex algorithms for working, and cost-effectiveness for the insurer as well as consumers. Secondly, PAYD insurance encourages consumers to drive less and drive green. This reduces vehicle emissions and contributes to the worldwide environmental efforts. As people drive less, the accidental risks associated with drivers reduce.
On-road vehicles are estimated to have the fastest growth in the Usage-Based Insurance Market
The number of on-road vehicles is very high when compared to new vehicles sold for a particular year, as on-road vehicles is a collective total. The penetration of usage-based insurance is lower in on-road vehicles as compared to new vehicles, however, owing to the huge difference in new vehicle sales and on-road vehicles, the Usage-Based Insurance Market for on-road vehicles is the highest in 2018 and is projected to be the largest market by 2025 as well. The increase of usage-based insurance in new vehicles will also drive the market for on-road vehicles as the usage-based insurance service providers offer discounts and loyalty bonus for renewals. Hence, multiple car owners are expected to continue using usage-based insurance as their vehicle gets older.
Increasing vehicle with telematics and connected car and reduction in insurance premium as compared to regular insurance would drive the Americas Usage-Based Insurance Market
The Americas is projected to lead the Usage-Based Insurance Market for automotive during the forecast period owing to the highest adoption rate of usage-based insurance for new and on-road vehicles equipped with either OBD-II or OE-fitted telematics unit. Most of the cars sold in North America, especially the US and Canada, belong to the premium segment. The dominance of premium cars increases the adoption rate of usage-based insurance as their regular insurance is very high. Through usage-based insurance, vehicle owners can save up to 30% on insurance premiums.
The Usage-Based Insurance Market consists of companies such as Progressive Corporation (US), Vodafone (UK), Allstate (US), Octo Telematics (UK), TomTom (Netherlands), Allianz (Germany), AXA (France), Liberty Mutual (US), Verizon (US), and Sierra Wireless (Canada).
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