This report summarises Transforma Insights’ view on the Usage Based Insurance (UBI) Application Group found in the Transforma Insights Connected Things IoT forecast.
The report covers details on the benefits of UBI, the role of connected telematics devices, potential savings, and market sentiments on the use and need for UBI devices.
Mostly concentrated in developed regions such as North America and Europe, the market for usage-based insurance is typically triggered by the rising cost of insurance premiums, innovation within the local insurance industry, and shifting consumer preferences.
Global adoption of UBI is still very fragmented in nature, largely due to the need to develop solutions to suit national markets. Smaller markets lag in UBI adoption due to its high cost to implement. However, the launch of connected cars equipped with OEM-backed software solutions can increase the adoption of UBI, particularly in smaller
markets. This could in turn launch new vendors in the market.
The report provides a detailed definition of the sector, analysis of market development and profiles of the key vendors in the space. It also provides a summary of the current status of adoption and Transforma Insights’ ten-year forecasts for the market. The forecasts include analysis of the number of IoT connections by geography, the
technologies used (including splits by 2G, 3G, 4G, 5G, LPWA, short range, satellite and others), as well as the revenue split between module, value-added connectivity and services.
A full set of forecast data, including country-level forecasts, sector breakdowns and public/private network splits, is available through the IoT Forecast tool.
This section talks about the general benefits of usage-based insurance for vehicle owners, like reduced insurance premiums through changed driving behaviour. The market development section is further categorised into:
This section of the report begins with the benefits of UBI for the insurance market, including the availability of more data about drivers resulting in more accurate insurance premiums. It then discusses how the usage-based insurance sector is beneficial for automotive OEMs and the benefits they ensure for the users - like directly marketing their add-on service offerings to users and giving direct access to data from vehicles’ sensors. It then explains how an aftermarket device can enable not only UBI but also support similar services such as fleet management, stolen vehicle recovery, and emergency calls.
This section of the report explains how various consumers like new drivers and those with low annual mileage benefit from UBI. It also shows how the adoption of UBI has drastically increased in the UK market, adding that 81% of UK car drivers were aware of telematics insurance, 8% were currently using them, and about 35% planned to consider it in their next insurance renewal.
It adds that the incorporation of telematics also impacts driving behaviour positively. For instance, as per a survey conducted by the Insurance Research Council, 45% of US drivers reported improved driving behaviour after enrolling in a telematics program recommended by their insurance providers, as their insurance costs were reduced with careful driving.
This section of the focus expounds upon the effect on the motor insurance market by the Covid-19 pandemic. For instance, the rise in work-from-home and hybrid working models reduced the number of vehicles on the road but encouraged the usage of pay-as-you-drive models of UBI.
Interestingly, it explains how despite fewer drivers being on the road, the number of accidents increased (leading to an incentive for the insurance companies to provide UBI policies) and the reasons behind this. Then it focuses on the rising cost of insurance premiums for consumers and in a tabular format, compares the cost of car insurance premiums in the UK, beginning with Q3 2021 to Q3 2024.
This section claims that the rising cost of insurance premiums and inflation is leading to the rising costs of new cars and parts and repairs, which is increasing the number of telematics devices, which encourage drivers to inculcate safe driving habits, which in turn, reduces the requirements of repairs. It then charts some of the limitations associated with UBI, which may hamper its adoption, including lack of knowledge about telematics, privacy concerns, and misconceptions about the costs and savings of UBI.
It also explains that the market is essentially divided based on geography and smaller markets lag in UBI adoption due to the prohibitive cost of implementation and limited opportunity for returns. It also adds that government regulations can significantly impact the market. For instance, the Insurance Regulatory and Development Authority of India introduced legislation in 2024 requiring Indian insurance companies to offer pay-as-you-drive insurance policies to all customers. This section also provides a few examples of case studies, including Ansvar Insurance partnering with Swiss Re to deploy telematics devices, which were used for pricing adjustments and on-demand assistance.
The key vendors section lists some of the main providers of products and services related to the usage-based insurance market such as ByMiles, IMS, Octo Telematics, Cambridge Mobile Telematics, Progressive (Snapshot), Insure The Box, The Floow, and Targa Telematics. The report provides profiles of the various vendors including aspects most relevant to this Application Group, such as product offerings, pricing, financial results, and technology.
In the market forecasts section, we provide a summary of the forecasts from the Transforma Insights IoT Forecast Database:
The report charts the growth in the number of devices which will grow from 49 million in 2023 to 205 million in 2033.
Transforma Insights forecasts are compiled on a country-by-country basis. This report includes a regional summary, showing splits between Australasia, Greater China, North America, Europe, Japan, Latin America, MENA, Russia & Central Asia, South East Asia, South Korea, India & South Asia, and Sub-Saharan Africa.
Transforma Insights’ IoT forecasts include splits between the various connectivity technologies as follows: 2G, 3G, 4G, 5G mMTC, 5G non-mMTC, LPWA (non-mMTC), Satellite, Short Range, and Other.
This section discusses which technologies will be used in the usage-based insurance application group.
This part of the report discusses the market growth in terms of revenue (module revenue, service wrap revenue, and VAC revenue). Transforma Insights estimates that the revenue in the Usage-based Insurance Application Group will grow at a CAGR of 18%.
