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Automotive Usage-Based Insurance: A Leading Driver Behind Growing Vehicle Ownership Boosts Growth Of The Automotive Usage-Based Insurance Market Market Expansion in 2025
Automotive Usage-Based Insurance
What Will the Automotive Usage-Based Insurance Industry Market Size Be by 2025?
In recent times, there has been a significant expansion in the size of the automotive usage-based insurance market. It is projected to escalate from $48.9 billion in 2024 to $57.91 billion in 2025, marking a compound annual growth rate (CAGR) of 18.4%. The surge in the historical phase can be associated with factors such as the increase in insurance premiums, advancements in connected vehicles, requirement for an enhanced risk evaluation, regulatory modifications supporting usage-based schemes, and the integration of mobile applications.
What's the Long-Term Growth Forecast for the Automotive Usage-Based Insurance Market Size Through 2029?
The market size of usage-based insurance in the automotive industry is set to increase rapidly in the coming years. It is projected to reach $112.35 billion by 2029, with a compound annual growth rate (CAGR) of 18.0%. Factors contributing to this anticipated growth during the forecast period include advances in AI and machine learning, improved measures for information privacy and security, compatibility with smart home innovations, the expansion of subscription-based insurance methods, and escalating environmental concerns. Notable upcoming market trends include the use of AI and machine learning for superior risk evaluation, the emergence of personalized and flexible insurance plans, rising use of telematics in electric vehicles, the adoption of real-time data from interconnected and autonomous vehicles, and the proliferation of subscription-based schemes.
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What Are the Key Growth Drivers Fueling the Automotive Usage-Based Insurance Market Expansion?
The rise in vehicle ownership is projected to fuel the expansion of the automotive usage-based insurance market. The term 'vehicle ownership' signifies the acquisition and registration of any motor vehicle by a person or an organisation, entailing the rights and responsibilities linked with the vehicle. The spike in vehicle ownership can be attributed to factors such as economic development, increase in disposable income, urbanisation, and growing requirement for personal mobility. The automotive usage-based insurance (UBI) promotes safe driving and rewards less frequent drivers with less expensive premiums. It offers customised rates depending on driving behaviours, making it appealing to cost-aware car owners. For example, Statistics Canada, a government agency, reported that the total number of registered road motor vehicles in 2022 stood at 26.3 million, reflecting a modest increase of 0.3% from 2021. Hence, the surge in vehicle ownership is propelling the expansion of the automotive usage-based insurance market.
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What Are the Key Trends Driving Automotive Usage-Based Insurance Market Growth?
Leading enterprises functioning in the field of automotive usage-based insurance are prioritizing the creation of unique products like usage-based insurance models. The objective is to present individualized premiums, improve user engagement, and provide better risk evaluations. The insurance models hinge on data derived from vehicle telematics to gauge driving patterns, taking into account factors like speed, distance, and frequency. This approach enables insurance providers to extend custom-tailored premiums that reward safe driving, resulting in comprehensive risk assessments. For instance, in August 2024, Zuno General Insurance Limited, a company based in India, introduced Pay How You Drive. The initiative seeks to award safe driving behaviours and give clients greater autonomy over their insurance expenses. This insurance model tweaks car insurance premiums to correlate with personal driving habits, determined via a mobile application that presents a Zuno Driving Quotient. More than just giving discounts related to driving scores, it encourages safer driving habits. Customers can keep track of their performances and receive rewards for improved driving practices.
How Is the Automotive Usage-Based Insurance Market Segmented?
The automotive usage-based insurance market covered in this report is segmented -
1) By Type: Pay-As-You-Drive (PAYD), Pay-How-You-Drive (PHYD), Manage-How-You-Drive (MHYD)
2) By Vehicle Type: Passenger Cars, Commercial Vehicles
3) By Technology: Black Box, On-Board Diagnostics (OBD)-II, Embedded, Smartphone, Other Technologies
4) By Distribution Channel: Insurance Companies, Aggregator Platforms
5) By End-User: Individual Consumers, Fleet Owners Or Managers
Subsegments:
1) By Pay-As-You-Drive (PAYD): Distance-Based PAYD Insurance, Time-Based PAYD Insurance, Geographical PAYD Insurance
2) By Pay-How-You-Drive (PHYD): Driving Behavior-Based PHYD Insurance, Speed And Acceleration-Based PHYD Insurance, Risk-Based PHYD Insurance (Harsh Braking, Cornering)
3) By Manage-How-You-Drive (MHYD): Telematics-Driven MHYD Insurance, Driver Coaching And Feedback-Based MHYD, Risk Reduction And Safety-Enhanced MHYD
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Which Companies Are Leading the Charge in Automotive Usage-Based Insurance Market Innovation?
Major companies operating in the automotive usage-based insurance market are State Farm, MetLife Services and Solutions LLC, Nationwide Mutual Insurance Company, Allstate Insurance Company, Progressive Casualty Insurance Company, Chubb Limited, The Travelers Indemnity Company, Aviva plc, Government Employees Insurance Company (GEICO), MAPFRE SA, American Family Insurance, Mitsui Sumitomo Insurance Group, Bajaj Finserv Limited, Verisk Analytics Inc., Liberty Mutual Group Inc., Root Insurance Company, The Zebra, Lemonade Inc., Berjaya Sompo Insurance Berhad, Arity LLC, Octo Telematics S.p.A, Insurethebox limited, Flock Limited, Mile Auto Inc.
Which Regions Are Leading the Global Automotive Usage-Based Insurance Market in Revenue?
North America was the largest region in the automotive usage based insurance market in 2024. Asia-Pacific is expected to be the fastest-growing region in the forecast period. The regions covered in the automotive usage-based insurance market report are Asia-Pacific, Western Europe, Eastern Europe, North America, South America, Middle East, Africa.
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