Bright Future for Usage-Based Insurance Market : CAGR 27.7%

Usage-Based Insurance Market for ICE & Electric Vehicle by Package (PAYD, PHYD, MHYD), Technology (OBD-II, Black box, Smartphone, Embedded), Vehicle Age (New, Old), Device Offering (BYOD, Company Provided) and Region


Northbrook, IL 60062 -- (SBWIRE) -- 08/10/2022 -- The Usage-Based Insurance Market is projected to reach USD 66.8 billion by 2026 from an estimated USD 19.6 billion in 2021, at a CAGR of 27.7% during the forecast period.

The market is expected to witness rapid growth with the increasing adoption of telematics and smartphone-enabled programs. Leading automakers now use telematics devices and in-car technologies to collect and analyze data, which in turn helps insurance providers evaluate the risk profile of a driver. Further, these companies reward safe drivers by offering discounts on insurance.

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).

The smartphone segment is expected to be the fastest-growing market

According to MarketsandMarkets analysis, a smartphone is the fastest-growing segment, by technology, of the usage-based insurance market owing to the increasing popularity of mobile telematics. In the current market scenario, the black box is widely used as it offers reliable data collection and has gained high customer acceptance. The major market is expected to be concentrated in North America and Europe owing to the presence of key players, affinity towards advanced automotive technologies, and relatively higher awareness of UBI than in the Asia Pacific.

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Blackbox is expected to be the largest usage-based insurance market, by technology

The black box is the traditional form of UBI technology widely preferred by vehicle owners. The increased use of telematics insurance in usage-based insurance for heavy-duty vehicles will increase the demand for the black box. Currently, the penetration is highest in Europe, particularly in Italy. The black box captures a wide array of data and is very accurate. However, these devices are expensive and need to be installed by a specialist, thereby increasing the overall initial cost of the service. Also, the UBI market is witnessing a shift from a black box to an embedded system. Smartphone, OBD-II UBI technologies. Hence, the segment may affect its market share in the future, but will still remain the widely adopted UBI technology.

Light-Duty Vehicle (LDV) is expected to lead the market during the forecast period

Light-duty vehicles constitute passenger cars and light commercial vehicles. The adoption rate of UBI is higher in LDVs than HDVs. Light-duty vehicles can be easily fitted with OBD-II, black boxes, or other devices to access usage-based insurance plans. Additionally, as LDVs are generally driven by a single person, UBI plans based on driver behaviour are ideal for this vehicle segment. Also, leading companies are developing various products and solutions for LDVs such as ride-sharing and autonomous vehicles. Thus, in the coming years, LDVs are expected to witness strong UBI penetration.

North America is expected to lead the market during the forecast period

North America is projected to be the largest market for usage-based insurance during the forecast period. The market in North America is expected to grow due to the increasing adoption of Mobility as a service and increasing collaborations between telematics and insurance companies. The presence of leading UBI companies such as Progressive Casualty Insurance Company (US), Allstate Insurance Company (US), State Farm Automobile Mutual Insurance Company (US), and Liberty Mutual Insurance Company (US) is also expected to drive the usage-based insurance market.

The insurance companies offering telematics insurance are constantly leveraging various factors to enhance solutions and deliver better packages and schemes. For instance, in January 2021, Webfleet Solutions announced that Mercedes-Benz Connectivity Services has joined its OEM.connect partner programme. This means that Mercedes-Benz passenger cars and vans with line-fitted connectivity are ready to connect with Webfleet Solutions' service platform WEBFLEET. Eliminating the need for after-market hardware installations, the integrated solution makes it faster, easier and cheaper for fleet managers to utilise telematics technology.

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Recent Developments:

1. In February 2021, the Progressive Corporation and Protective Insurance Corporation announced that they have entered into a definitive agreement under which Progressive has agreed to acquire all of the outstanding Class A and Class B common shares of Protective Insurance Corporation.
2. In December 2020, Progressive Corporation now offers Snapshot ProView, a voluntary UBI and fleet management program for small business owners. Snapshot ProView joins Smart HaulĀ®, Progressive's industry UBI program for commercial truck drivers, which uses Electronic Logging Device (ELD) data to provide safe driving discounts. Snapshot ProView is for all other Commercial Auto customers not required by federal law to have an ELD.
3. In October 2020, Liberty Mutual Insurance announced it has been selected by Lyft to provide coverage for drivers using its rideshare platforms throughout Arizona, Michigan, New Mexico, Texas and Utah, effective today. Under the program, Liberty Mutual provides specific coverages in five states from the time a driver has their Lyft app on to the app off.
4. In June 2019, UnipolSai launched Real-Time adjustment, a process that allows the insured to receive a proposal from the adjuster within 24 hours of the claim, on the condition that there were no casualties. The process helps ease the use of the black box.