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(Transportation-News.com, June 22, 2021 ) The Usage-Based Insurance Market is projected to reach USD 66.8 billion by 2026 from an estimated USD 19.6 billion in 2021, growing at a CAGR of 27.7% during the forecast period. The increasing adoption of telematics and connected car services is expected to drive the usage-based insurance market. The rolling out of various UBI packages in countries such as India, South Africa is expected to further drive its popularity.
UBI providers can work directly with OEMs to capitalize on the increasing trend of connected cars in developed as well as developing regions. UBI service providers can also provide customized plans for embedded systems that can give incentives to connected car owners to choose UBI policies.
Manage-how-you-drive or MHYD is estimated to be the fastest-growing usage-based insurance market. MHYD is an extended version of PHYD, which provides feedback to drivers on improvement areas besides just ranking them on driving behavior. This model is ideal for young drivers aged between 18 and 25 as they are new drivers. The MHYD system collects various driving behavior information such as harsh braking, sharp cornering, and overspeeding to rate the driver. The system also suggests improvements to the driver to help improve the driver's behavior and reduce insurance premiums for the driver. UBI companies can work together with telematics device manufactures, insurance companies, and OEMs to develop MHYD plans that suit the requirements of different customers.
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Smartphone is projected to be the fastest-growing segment of the usage-based insurance market, by technology. Using a smartphone for UBI services offers multiple advantages such as flexibility, accurate driver drive behavior information, etc. Smartphones are now equipped with an array of sensors that can collect data for telematics analysis. A smartphone is a cost-effective option for UBI services as the user is not required to purchase an external hardware device, and no vehicle installation is required. Hence, the system can be implemented quickly without any additional hardware requirements. Thus, smartphone technology is expected to witness a strong boost.
According to MarketsandMarkets, Asia Pacific is estimated to be the fastest-growing market for usage-based insurance during the forecast period. Market growth in this region can be attributed to the increasing adoption of telematics and the rising trend of car-sharing and ride-hailing in developing countries such as India, Malaysia, Australia, and Japan. Japan dominates the market in 2020 and is anticipated to continue its dominance during the forecast period owing to significant developments in connected and autonomous vehicles and increasing adoption of telematics services.
Thus, the growing adoption of telematics in LDVs and HDVs, growing awareness about UBI packages is expected to be the major reasons for UBI growth. COVID-19 gave a boost to the adoption of UBI in several countries. The growing popularity of mobile telematics, OBD-II is also expected to propel the market.
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Key Market Players:
The usage-based insurance market is dominated by globally established players such as UnipolSai Assicurazioni S.p.A (Italy), Progressive Casualty Insurance Company (US), Allstate Insurance Company (US), State Farm Automobile Mutual Insurance Company (US), and Liberty Mutual Insurance Company (US).
Impact of Covid-19 on Usage-based Insurance Market
The automotive industry plays a crucial role in building the global economy. However, the COVID-19 outbreak disrupted the entire automotive supply chain on a global scale during the second and third quarters of 2020, impacting the new vehicle sales in FY 2020. According to OICA and MarketsandMarkets analysis, the new vehicle sales (including LDV and HDV) witnessed a decline of 14% in 2020. However, according to various insurance organizations/institutes, the COVID-19 pandemic gave a boost to the UBI industry. For instance, according to Insurance Information Institute (iii), US witnessed a strong boost as vehicle owners did not want to pay full automotive insurance premiums.
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Mr. Aashish Mehra
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