Usage-Based Insurance Market Size is Booming and Anticipated to Hit $149.22 Billion by 2027

As per the report published by Allied Market Research, the global usage-based insurance market generated $28.75 billion in 2019 and is estimated to reach $149.22 billion by 2027, witnessing a CAGR of 25.1% from 2020 to 2027.

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Growing adoption among end users and flexible insurance premiums drive the growth of the global usage-based insurance market. However, the high installation cost of telematics and various data security issues hinder the market growth. On the contrary, the adoption of advanced technologies including smartphone-based UBI & hybrid-based UBI, and a surge in concerns about driver's safety across the world are expected to create lucrative opportunities for market players in the future.

As most governments have imposed lockdowns across the country, most of the companies opted for a work-from-home culture. This has decreased the short trips, and therefore, the need for mile-based coverage across the globe.
The global usage-based insurance market is divided into policy type, technology, vehicle age, vehicle type, and region. Based on policy type, the pay-as-you-drive segment dominated the market in 2019, accounting for more than half of the market. However, the manage-how-you-drive segment is expected to manifest the highest CAGR of 29.7% during the forecast period.

Based on technology, the black-box segment held the largest share in 2019, contributing to more than three-fifths of the market. However, the smartphone segment is projected to portray the highest CAGR of 30.3% during the forecast period.

Based on vehicle age, the new vehicles segment held the lion's share in 2019, accounting for nearly three-fifths of the market. However, the used vehicle segment is anticipated to manifest the highest CAGR of 25.9% from 2020 to 2027.

Based on vehicle type, the light-duty vehicle (LDV) segment held the largest share in 2019, contributing to around three-fourths of the market. However, the heavy-duty vehicle (HDV) segment is expected to register the highest CAGR of 26.3% during the forecast period.

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The global usage-based insurance market is analyzed across various regions such as North America, Asia-Pacific, Europe, and LAMEA. The market across North America held the largest share in 2019, contributing to nearly two-fifths of the market. However, the market across Asia-Pacific is anticipated to manifest the highest CAGR of 27.6% from 2020 to 2027.

With the alarming increase in COVID-19 patients, various governments have implemented lockdown, which significantly reduced the number of vehicles on roads, which, in turn, increased the number of digital banking and access of premiums. Furthermore, with rise in digitization among both the financial institutes and end users, the demand for advanced machine learning technology increased to reduce the load on the banking servers and reduce transaction delay with rising digital transaction during the pandemic.

For instance, according to the survey of Prudential Regulation Authority (PRA) by Bank of England in August 2020, around 40% of respondents reported an increase in the importance of machine learning and data science for critical financial operation. Furthermore, around 35% of banks reported that machine learning and data science had a positive impact on technologies that support remote working among employees and on their overall security provided for ML projects. In addition, the pandemic has accelerated the use of ML-powered tools to manage a sudden increase in customer enquiries. Thus, a number of such development across the globe are anticipated to provide lucrative opportunities for the expansion of the usage-based insurance market.

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The global usage-based insurance market report includes an in-depth analysis of the major market players such as Allstate Corporation, Allianz SE, Insurethebox, Aviva, AXA, Mapfre S.A., Liberty Mutual Insurance, Nationwide Mutual Insurance Company, Progressive Corporation and UNIPOLSAI ASSICURAZIONI S.P.A.

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