Usage-based Insurance For Automotive Market Growth & Trends
The global usage-based insurance for automotive market size is estimated to reach USD 99.1 billion by 2027, expanding at a CAGR of 21.3%, according to a study conducted by Grand View Research, Inc. Technological advancements in the automotive insurance industry, such as the integration of telematics for insurance purposes, is accelerating market growth. Furthermore, the increasing number of government regulations for driver safety and decreased cost of connectivity solutions are further anticipated to drive the market growth.
Usage-based insurance offers several advantages to insurers and consumers. The telematics-based insurance allows the insurer to closely monitor the individual vehicle or fleet performance resulting in inaccurate pricing of the insurance premiums. Also, the data collected by the telematics device can improve fraud monitoring by augmenting crash monitoring data with fraud data models to recreate scenarios and detection of false claims. Furthermore, the adoption of usage-based insurance gives consumers the ability to control their cost of the premium by encouraging them to reduce the miles driven and to adopt safer driving habits. Thus, fewer miles and safer driving also assist in reducing accidents, vehicle emissions, and congestion.
The market is characterized by intense competition by the major players operating in the market. These players are focusing on entering into mergers and acquisitions as part of their growth strategy to hold a competitive position in the market. Moreover, the long-term benefits of the automotive insurance sector, the market is witnessing mutual partnerships with telematics service providers, helping to eliminate the design and deployment complexities related to IT and analytics services.
Usage-based Insurance For Automotive Market Report Highlights
- The Pay-How-You-Drive (PHYD) type segment held the largest revenue share in 2019. PHYD insurance policies are based on the driving pattern of the consumers, thus rising popularity of PHYD among customers owing to reduce insurance premiums is anticipated to drive the segment growth
- The Manage-How-You-Drive (MHYD) is expected to witness significant growth over the forecast period. This growth is attributed to real-time driving feedback to the driver coupled with instantaneous discounts on insurance premiums
- The smartphone segment is projected to witness substantial growth over the forecast period owing to ease of use and no additional requirement of the external telematics device
- The passenger vehicle type segment accounted for a market share exceeding 88.04% in 2019 owing to increasing sales of passenger vehicles coupled with new vehicles with pre-installed telematics devices
- North America held the largest revenue share exceeding 34.94% in 2019 and is anticipated to expand at a CAGR of over 18.3% over the forecast period. This share is attributed to the presence of technology providers and robust infrastructure for installing the device