According to a recently published Fact.MR report, the global Usage Insurance market is projected to grow at a compound annual rate (CAGR) of 17% between 2021 and 2031. The market is expected to reach US$ 150 Bn by the end of 2031. The demand for Usage Insurance is expected to rise over the forecast period and the market is projected to gain a global market size worth of US$ 30 Bn by the end of 2020.

According to the historical performance of the market, usage insurance uptake registered an impressive 10% CAGR to be valued at US$ 30 Bn in 2020. Prospects took a temporary dip in the first half of 2020, as the COVID-19 pandemic halted automotive manufacturing and distribution operations. Fortunately, the ever-surging EV popularity sustained demand.

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The Usage Insurance market is undergoing a transformative shift with the advent of innovative technologies and a growing emphasis on personalized risk management. Usage-based insurance (UBI) or telematics insurance is a dynamic approach where premiums are determined by an individual's behavior and usage patterns rather than traditional risk factors. The market has witnessed significant growth as insurers leverage telematics devices, mobile apps, and IoT (Internet of Things) connectivity to collect real-time data on policyholders' driving habits, enabling a more accurate assessment of risk. This shift towards usage-based models is reshaping the insurance landscape, particularly in auto insurance, where it has gained prominence, and it's increasingly being explored in other sectors such as health and property insurance.

Key Market Drivers:

• Advancements in Telematics Technology: The Usage Insurance market is being propelled by advancements in telematics technology, enabling insurers to gather detailed insights into policyholders' behavior. Telematics devices installed in vehicles or integrated into mobile apps record data on driving habits, including speed, acceleration, braking patterns, and distance covered. This wealth of real-time information allows insurers to make more informed decisions about risk and tailor premiums to individual usage patterns.

• Consumer Demand for Personalization: As consumers become more digitally savvy, there is a growing demand for personalized products and services, including insurance. Usage Insurance meets this demand by offering a more personalized approach to underwriting. Policyholders who exhibit safer driving behaviors are rewarded with lower premiums, fostering a sense of fairness and individual empowerment in managing insurance costs.

• Risk Mitigation and Loss Prevention: Insurers benefit from the Usage Insurance model by actively promoting safer behaviors among policyholders. The real-time monitoring of driving habits encourages individuals to adopt safer practices, leading to a reduction in accidents and insurance claims. This proactive risk mitigation not only benefits insurers in terms of lower claims but also contributes to road safety and overall community well-being.

Key Segments Covered in the Usage Insurance Industry Survey

Policy Type

• Pay-how-you-drive(PHYD)
• Pay-as-you-drive(PAYD)
• Manage-how-you-drive(MHYD)

Product

• Black Box
• OBD Dongle
• Smartphone
• Others

Vehicle

• Passenger Vehicle
• Commercial Vehicle

Competitive Landscape

Strategic collaborations enable insurance industries to increase revenue and market share. New products and technologies will enable the growth of usage-based insurance in the insurance industry.

• To accelerate expansion across Europe, insurance tech company bolttech acquired i-surance, a next-generation B2B2C digital insurance platform. Boltech now covers 26 countries across North America, Asia, and Europe following the acquisition of i-surance - including Switzerland, Belgium, Germany, France, Liechtenstein, Monaco, Luxembourg, Netherlands, Portugal, Poland, Spain, and the United Kingdom.
• Bolttech intends to expand its insurance exchange services in Europe to provide both partners and customers with more choices.

Key players in the Usage Insurance Market

• Insure the Box Limited
• Allstate Insurance Company
• State Farm
• Uniqa Insurance Group AG
• Groupama
• Generali Group
• UnipolSai Assicurazioni S.p.A

Key Takeaways from the Market Study

• Global usage insurance market to surge 5x until 2031 as compared to 2021
• Demand for pay-as-you-drive (PAYD) to account for 55% of global market revenue
• Smartphone-based usage insurance likely to expand at a CAGR of 9% through 2031
• By vehicle, commercial usage insurance to garner significant momentum, growing at 7% CAGR
• U.S to capture half of the global usage insurance demand across the decade
• Europe likely to register an expansion rate of 10% in value CAGR terms through 2031
• Asia to account for a growth rate of a staggering 15% from 2021 to 2031

Current Industry News (2023):

Several trends and developments may have shaped the Usage Insurance market in 2023.

• Expansion into New Insurance Segments: The Usage Insurance model may have expanded beyond auto insurance into new segments such as health and property insurance. Insurers could be exploring ways to apply usage-based approaches to health monitoring, encouraging healthier lifestyles, and property protection, rewarding homeowners for adopting safety measures.

• Integration with Connected Devices: Insurers may have explored partnerships and integrations with connected devices beyond traditional telematics. The market may see collaborations with wearable devices, smart home technologies, and health monitoring gadgets to collect a broader range of data for risk assessment and premium customization.

• Blockchain for Data Security: Given the concerns about data privacy, some insurers may have explored the use of blockchain technology to enhance data security and transparency. Blockchain's decentralized and secure nature could address privacy concerns and build trust among policyholders regarding the handling of their sensitive information.

• Regulatory Developments: The Usage Insurance market may have witnessed regulatory developments aimed at establishing clear guidelines for data collection, usage, and privacy protection. Regulators could play a crucial role in shaping the industry's practices, ensuring a balance between innovation and consumer protection.