Chicago, Aug. 30, 2022 (GLOBE NEWSWIRE) -- The global Usage-Based Insurance Market is expected to expand at a compound annual growth rate (CAGR) of 27.7% during the forecast period, reaching a value of USD 66.8 billion by 2026, according to a new report by MarketsandMarkets Research, 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.
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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 box, or other devices to access usage-based insurance plans. Additionally, as LDVs are generally driven by a single person, UBI plans based on driver behavior 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.
MHYD is expected to be the fastest-growing market
MHYD, an extended version of PHYD, provides feedback to drivers on improvement areas besides just ranking them on driving behavior. This model is ideal for young drivers aged between 18 and 25 as they are new drivers. The MHYD system works like PHYD by collecting various driving behavior information such as harsh braking, sharp cornering, and overspeeding to rate the driver. It suggests improvements in areas such as braking and speed. While the adoption rate of this model of usage-based insurance is expected to be less in developing markets, it is suitable for mature markets. The evolution of data analytics is expected to help MHYD gain momentum beyond 2023. With the increase in the adoption of PHYD UBI programs, the popularity of MHYD is set to grow in the future.
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Smartphone segment is expected to be the fastest-growing market
According to MarketsandMarkets analysis, a smartphone is a fastest-growing segment, by technology, of the Usage-Based Insurance Market owing to the increasing popularity of mobile telematics. In the current market scenario, 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 Asia Pacific.
North America is expected to lead the market during the forecast period
North America is estimated to be the largest market for usage-based insurance owing to the high adoption rate of usage-based insurance in new and on-road vehicles equipped with telematics units. Most of the cars sold in the US and Canada belong to the premium segment. The dominance of premium cars increases the adoption rate of usage-based insurance as their regular insurance is very high. With the help of usage-based insurance, vehicle owners can save up to 30% on insurance. In addition, the increasing number of companies offering hardware to avail usage-based insurance has also contributed to the growth of the market.
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).
