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Usage-Based Insurance: An IoT-driven paradigm shift for the insurance industry

  • Blackbox
  • Connected Vehicles
  • Hyperconnectivity
  • Insurtech
  • Internet of Things
  • IoT
  • OBD device
  • Pay as you Drive (PAYD)
  • Usage Based Insurance
  • Vehicle Telematics
  • Matt Arnott
This report summarises the status and forecasts from the Usage-Based Insurance Application Group found in the Transforma Insights Connected Things IoT forecast. The report describes what is covered in the Application Group, as well as top-level figures from the forecast that provide detail on how many connected devices will be installed, the types of communication technology used, and the total revenue opportunity. Full details are accessible through the TAM Forecast tool.

Report summary

This report provides Transforma Insights’ view on the Usage-Based Insurance Application Group. 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 and revenue. 

A full set of forecast data, including country-level forecasts, sector breakdowns and public/private network splits, is available through the IoT Forecast tool.

Key market developments in Usage-Based Insurance Application Group

The report examines key factors that are influencing the development of the market, including:

Benefits of UBI for insurance providers

This section of the report discusses the chief benefits of Usage-based Insurance for the insurance market, which include more accurate insurance premiums, chances of speeding up claims, and limiting fraudulent claims. It claims that major insurance providers are now increasingly collaborating with telematics and UBI solutions. For instance, in 2007, Allianz introduced a trial program to test the usage-based insurance on 80,000 vehicles in Europe.  

Usage-Based insurance and OEMs

This section talks about how the Usage-Based Insurance sector enables automotive OEMs to directly market their add-on services by bundling deals with a new car purchase. It also explains how the increasing number of connected car offerings and their adoption will accelerate the adoption of UBI as a whole (but not in the case of commercial fleets, where companies would prefer a standardised insurance policy). 

Consumer benefits of using UBI

This section of the report discusses how many consumers (including new drivers or users with low annual mileages) stand to benefit from UBI, which has led to its increased demand. Using UBI, new drivers can reduce their premium rates by 30% which will undoubtedly increase its adoption. To cite an example, in a survey conducted by Belairdirect in Canada in 2018, it was found that a majority of participants were willing to have telematics devices or apps monitor their driving if they lower their premiums. 

Impact of Covid-19 on Usage-Based Insurance              

This section explains how the Covid-19 pandemic encouraged more users to adopt Pay-As-You-Drive models of UBI (since many of them were working from home, significantly reducing the number of vehicles on roads). For instance, a survey by Arity in May 2020 revealed that almost 50% of users (among 1000 participants) were comfortable with having their insurance premium cost based on the number of miles they drive, where they drive, and what time of day they drive.

Challenges towards the adoption of Usage-based insurance

This section of the report discusses some of the barriers that may affect the adoption of UBI, such as the reluctance of some drivers to share their driving habits with insurers (mostly owing to users’ concerns about privacy and inaccuracy of data recording). For instance, according to a survey by HSB, more than a third (37%) of US drivers are quite
concerned about the cyber-security and safety of connected and automated vehicles.  

Smartphones acting as a boon for Usage-Based Insurance

This section explains how smartphones have been a boon for UBI as an industry (although they have proven to be stumbling blocks for more expensive solutions that require separate IoT devices), since they ensure cost savings and result in even lower base premium pricing than other options.

The report also provides examples of some relevant IoT deployments in this application, like Nationwide Insurance leveraging Insurance & Mobility Solutions (IMS) to launch UBI and Discovery Insurance introducing UBI in South Africa with the help of Cambridge Mobile Telematics.

Key vendors for Usage-Based Insurance

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, Targa Telematics, and Viasat 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.

Market forecasts for Usage-Based Insurance Application Group

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 41 million in 2020 to 213 million in 2030. 

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 21%.

  • Allianz
  • Amaline
  • Arity
  • Audi
  • AXA
  • Belairdirect
  • ByMiles
  • Cambridge Mobile Telematics
  • Carro
  • Daimler
  • Discovery Insurance
  • Drivit
  • Erie Insurance
  • Ford
  • Greater Than
  • Hastings Direct
  • Hertz
  • HSB
  • Insure The Box
  • IMS
  • JD Power
  • LowestRates
  • Movinx
  • MSI
  • Munich Re
  • Nationwide Insurance
  • Octo Telematics
  • Otonomo
  • Progressive
  • Raptor
  • Scope Technology
  • State Auto Insurance
  • Swiss Re
  • Targa Telematics
  • The Floow
  • Unipol
  • Viasat
  • Telematics
  • Willis Towers Watson
  • Zego
  • Zurich Insurance
  • Internet of Things
  • Hyperconnectivity
    • Finance & Insurance