Usage-based Insurance Market for PAYD segment is expected to grow at over 19% CAGR during the forecast timeline

Usage-based Insurance Market for PHYD segment is projected to hold a major market share of around 66% by 2024. PHYD insurance aims at charging premiums according to an individual’s driving habits, which help insurers to offer premiums that are more tailored to individual drivers. The insurers can set the rates based on driving skills and the time from when the user is most likely to be driving. Many insurers also share data with their clients to allow them to monitor their own driving behavior.

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The OBD-II technology held a major usage-based insurance market share of around 50% in 2017 and is projected to dominate the market between 2018 and 2024. Earlier OBD devices were used to read fault codes and parameters associated with the malfunctioning of the emission systems. But with the growing trend of IoT, OBD dongles embedded with sensors are being used to detect hard breaks and accelerations, thus determining driving patterns, fuel efficiency, and road conditions. As these dongles are easy to install, they are being widely used for tracking the vehicles systems and the driving pattern.

The commercial vehicles segment is estimated to show the fastest growth rate of over 18% from 2018 to 2024 due to the adoption of telematics and other vehicular technologies to support the growth of the commercial vehicle transportation industry. Commercial vehicles leverage these technologies to increase the driving efficiency via real-time communications. Transportation companies can share the telematics data with the insurance companies and help them in setting premium rates and discounts for customers based on their driving behavior records. UBI helps in improving driver safety and reducing accidents by encouraging safe driving practices with a real-time feedback. Also, it provides fleet managers with deep insights about the driver’s behavior, along with the fleet operating data that ensures safer fleet operations.

North America is projected to hold a dominant share of around 38% in the usage-based insurance market by 2024. The market growth is driven by an increase in the use of telematics systems that are equipped with features such as vehicle tracking systems, remote theft alarm, and driver assistance systems. The rising incidents of vehicle theft in this region are expected to augment the usage-based insurance market growth. According to the Insurance Information Institute, in 2017, around 773,139 vehicles were stolen in the U.S. as compared to 767,290 vehicles in 2016. The adoption of telematics-driven UBI helps insurers to improve profitability and reduce fraudulent claims. A massive growth of the connected cars market and an increased use of smartphone telematics for monitoring driver behavior will accelerate the UBI market growth over the forecast timeline.

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Usage-based insurance market is expected to witness a sharp growth over the forecast timeline owing to the rapid development and adoption of connected cars. These cars are equipped with sensors that monitor miles driven, location, route, driver’s behavior, and vehicle data including the temperature and tire pressure. This data is then used by the insurers to influence driving behavior, increase claim-processing efficiency, and lower insurers losses by enabling the detection of fraudulent claims. Other factors driving the UBI market growth are the penetration of insurance telematics in passenger & commercial vehicles and the growing trend of Try-Before-You-Buy (TBYB) insurance packages.

The TBYB model allows drivers to use a smartphone application that gathers data, enabling insurers to analyze risks before insuring the driver. The new solution also enables policy-holders to make sure that the policies are tailored according to their needs.

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Some of the major players of the operating in the usage-based insurance market are Progressive, Allstate, State Farm, AXA, Allianz, Liberty Mutual, Nationwide, Vodafone Automotive, UnipolSai, Generali, Octo, Metromile, TomTom, Insure The Box, Mapfre S.A, Zubie, Desjardins Group, Sierra Wireless, IMS, Cambridge Mobile Telematics, and Danlaw.