Until recently a large section of car owners were content with conventional car insurance policies or a comprehensive insurance that covered vehicle damage but with a significant number of exclusions. Customers are yet to know about various novel covers, as a result most policyholders still tend to opt for traditional means of insuring their vehicles.
However, they are soon realizing flaws in ‘one-size-fits-all’ approach offered by insurance providers. Comprehensive insurance often do not take into account realities of the market. This is however expected to change with the advent of usage based insurance (UBI), also referred to as pay-as-you-drive or pay-per mile insurance.
UBI is a special type of auto insurance that determines how far a vehicle is driven based on a specific insurer’s program. It is usually powered by the telematics technology that is either pre-installed in a vehicle or is available using a plug-in-devices. It is also available via mobile applications were car insurers can access data about how drivers are braking or accelerating the speed of vehicle, how long they have been behind their wheels, and others.
UBI Becoming Highly Sought-after Among Trucking Companies
Prospects for growth seem highly lucrative for the UBI market. User based insurance provides customers with cutting-edge technology to monitor driving behavior in real-time. Insurance providers too, find impressive advantages as UBI offers them an accurate picture of their client’s driving behavior.
Major insurers have been involving to offer telematics and usage based insurance solutions. Some of the behemoths in the industry have been trailing this type of systems. Within a few years it has become apparent that commercial telematics systems and UBI can help vehicle owners, especially trucking companies keep tract of driving habits of their drivers ensuring better vehicle and road safety.
Possibilities of Reducing Cost Incurred on Insurance
The UBI insurance policy leverages the machine-to-machine technology to obtain data from in-car devices, enabling the insurance providers to determine and customize premiums based on the driving behavior of an individual. This ultimately helps in having control over claim cost. Coupled with this, the recent improvements in pricing models are expected to give tailwinds to the growth witnessed in the market.
Recent studies suggest that UBI programs offer greater customer satisfaction to good drivers. This program rewards best drivers, helping insurance companies to forge lasting and intimate relationship with their clients. Those who fail to see reduction in their insurance premium, are presented with sincere reasons causing their situation.
Complexity of the Process Hindering Uptake
Applying for and the overall process of usage based insurance can be very complex. For a successful UBI, various industries included IT and telecom, hardware, and insurance are required to perform in tandem with one another. Since the market faces several hurdles including legal and need for sophisticated IT infrastructure, its penetration is limited in certain country. Moreover, a significant share of the clients may not be in favor of sharing their vehicle data with insurance companies, which could hinder the overall growth of the market.
COVID-19 Impact on Usage Based Insurance Market
While the insurance sector is generally prepared for unforeseen events, including unprecedented outbreak of pandemic, but the financial implications of COVID-19 on the usage based insurance market might take some time for assessment. While most companies have business continuity plans, they might not be fully aware about unknown variables of outbreak of a scale such as the COVID-19.
The pandemic situation has already had a negative impact on both internal and external communication, making it difficult for insurance companies to offer prompt response. As such smaller insurance providers may face litigation risk or threat of losing reputation. Additional pressure on growth and capital levels, coupled with depression of asset value can result in deterioration of the overall credit quality. This could hamper insurance businesses around the world
Usage Based Insurance Market Insights by Policy
Among policies available in the market, Fact MR forecasts the demand for pay-as-you-drive (PAYD) is forecast to be higher than the rest. In the PAYD model the value of premium is determined based on the miles driven by a car. Odometers are generally installed in the cars and then connected to a wireless device to calculate this. Over the course of the forecast period, the demand witnessed in the pay-how-you drive (PHYD) segment too is expected to surge at an impressive pace.
Usage Based Insurance Market Insights by Product
In terms of product, the global market can be categorized into black box, OBD dongle, smartphones, and others. Of these, the market is expected to be dominated by the black box segment. OBD segment too will witness surge in popularity. The demand for greater accuracy in data collected and long-term connectivity of devices will aid growth in the black box segment.
Usage Based Insurance Market Insights by Vehicle
In terms of vehicle, the market can be bifurcated into commercial vehicle and passenger vehicle. Growth witnessed in the passenger vehicle segment is expected to be considerably higher. Higher focus of car owners on rewarding insurance policies, while saving cost will drive growth within the segment.
Regional Outlook on Usage Based Insurance Market
North America currently holds dominance in the global market for usage based insurance. The rising confidence of consumers in the insurance models will aid the expansion witnessed in the region. Also consumers in the region are well information, which has helped in catapulting the market among other models of insurance available in North America.
Europe too has emerged as a lucrative market and is forecast to continue offering attractive growth opportunities. Greater focus towards road and driver safety will aid expansion in the region. Besides this, Europe has become an attractive, exhibiting higher uptake of connected vehicles. This is expected to bode well for the market in the region.
Usage Based Insurance Market Competitive Landscape
The global usage based insurance market comprises of the following players:
- Insure the Box
- AllState Insurance Company
- State Farm
- Liberty Mutual
- Allianz SE
Companies operating in the market are currently focusing on strategic collaborations besides strengthening their research and development (R&D) capabilities to gain competitive edge. They are constantly focusing on finding ways of improving their customer services to give tailwinds to their brand names. Acquisitions too are not uncommon in the market.
For instance, in October 2017, assets of Wills Towers Watson were acquired by Octo Telematics to strengthen the telematics portfolio of the latter. Likewise, collaboration between Electronic Logging Device (ELD) vendors and Progressive Casualty Insurance Company in September 2018 was intended at collecting vehicle data as per the Federal Motor Carrier Safety Administration’s final ELD mandate.
“With several collaborations and acquisitions underway, research initiatives in the UBI market are expected to gain impetus. While uptake of the insurance model is more prevalent in the west, thanks to expansion efforts undertaken by leading companies, the market soon will establish a stronghold in countries exhibiting a high prevalence of unmet vehicle insurance needs.”
Usage Based Insurance Market – Scope of the Report
Fact.MR has published an exclusive forecast report on the usage based insurance market from 2020 to 2030. The foremost objective of this report is to pitch insights on the market scenario, demand generators, and technological advancements in the usage based insurance market. Also, the study addresses key dynamics expected to diversify the sales and future trajectory of the market.
The report begins with an executive overview, in which, product definition has been provided. The report further proceeds with the taxonomy of the usage based insurance market, elaborating on key segments. Also, the report outlines visionary insights on the dynamics of the usage based insurance market, including the drivers, restraints, opportunities, trends, and pricing analysis, along with the key buying factors for usage based insurance.
A recent study by Fact.MR on the usage based insurance market offers a 10-year forecast from 2020 to 2030. The study analyzes crucial trends that are currently determining market growth. This report explicates on vital dynamics, such as the drivers, restraints, and opportunities for key market players along with key stakeholders and emerging players associated with the offering usage based insurance policies. The study also provides the dynamics that are responsible for influencing future status of the usage based insurance market over the forecast period.
A detailed assessment of the usage based insurance value chain analysis, business execution, and supply chain analysis across regional markets has been covered in the report. A list of prominent companies operating in the usage based insurance market, along with their product portfolios, enhances the reliability of this comprehensive research study.
Usage based insurance Market: Report Summary
The study offers a comprehensive analysis on diverse factors, including demand, product developments, revenue generation, and sales in the usage based insurance market across the globe.
A comprehensive estimate on the usage based insurance market has been provided through an optimistic as well as a conservative scenario, taking into account the sales during the forecast period. Price point comparison by region with global average price is also considered in the study.
Usage Based Insurance Market – Segmentation
Fact.MR’s research study assesses the global usage based insurance market in terms of raw material, form, application and region. This report presents extensive market dynamics and trends associated with different segments of the market and their influence on the growth prospects of the global usage based insurance market.
Key Questions Answered in Fact.MR’s Usage Based Insurance Market Report
- Which regions will continue to remain the most profitable regional markets for usage based insurance market players?
- Which factors will induce a change in the demand for usage based insurance during the assessment period?
- How will changing trends impact the usage based insurance market?
- How can market players capture the low-hanging opportunities in the usage based insurance market in developed regions?
- Which companies are leading the usage based insurance market?
- What are the winning strategies of stakeholders in the usage based insurance market to upscale their position in this landscape?
Usage Based Insurance Market: Inspected Assessment on Regional Segments
Key sections have been elaborated in the usage based insurance market report, which have helped deliver projections on regional markets. These chapters include regional macros (political, economic and business environment outlook), which are expected to have a momentous influence on the growth of the usage based insurance market during the forecast period.
Country-specific valuation on demand for usage based insurance market has been offered for each regional market, along with market scope estimates and forecasts, price index, and impact analysis of the dynamics of prominence in regions and countries. For all regional markets, Y-o-Y growth estimates have also been incorporated in the report.
Detailed breakup in terms of value for emerging countries has also been included in the report.
Usage Based Insurance Market: Research Methodology
In Fact.MR’s study, a unique research methodology is utilized to conduct extensive research on the growth of the usage based insurance market, and reach conclusions on the future growth parameters of the market. This research methodology is a combination of primary and secondary research, which helps analysts ensure the accuracy and reliability of the drawn conclusions.
Secondary resources referred to by analysts during the preparation of the usage based insurance market study include statistics from governmental organizations, trade journals, white papers, and internal and external proprietary databases. Analysts have interviewed senior managers, product portfolio managers, CEOs, VPs, marketing/product managers, and market intelligence managers, all of whom have contributed to the development of the usage based insurance market report as a primary resource.
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