Fact.MR conducted a survey covering the usage insurance industry and its projected market size for 2031. According to an expected compound annual growth rate (CAGR) of 17%, the global market for usage insurance may reach as high as USD 150 billion. This is an incredibly impressive jump for ten years, as the projected worth of the usage insurance market as of 2021 was near USD 30 billion. Even with Covid-19 implications on automobile manufacturing, the usage insurance market continued to increase in value. This sustained market value over turbulent times was largely in part to the rising popularity of electrical vehicles from manufacturers such as Tesla and Li Auto.

The value of telematics technology in the usage insurance industry can’t be stated enough. It’s quickly becoming the most popular tool for insurance companies to provide accurate premiums to their policyholders. It provides insurance companies with in-depth data about an array of driver and vehicle performances. Insurers can identify the exact number of kilometres driven by their policyholders and even their average break and acceleration speeds. The introduction of telematics technology provides both insurers and policyholders with unparalleled transparency in car insurance policies. 

This growing popularity is evident in the US, with a takeover of TrueMotion by Cambridge Mobile Telematics. Cambridge Mobile Telematics now provides telematics services to nearly 85% of the top auto insurers in the US. With an expected market growth of 500% (50% per year) by 2031, the usage insurance industry is sure to pique global interest in this rapidly evolving market.   

Usage insurance market segments covered by the Fact.MR survey

The survey where Fact.MR derived the expected CAGR of the usage insurance market takes into consideration several market segments. Below, you can explore the different areas of the usage insurance market that are likely to contribute to this exceptional growth:

Policy types

The usage insurance industry involves varying policy types. Some are becoming outdated while others are penetrating markets across the globe. The key policy types expected to grow in the global usage insurance market are:

• Pay-as-you-drive (PAYD) car insurance policies

• Pay-how-you-drive (PHYD) car insurance policies

• Manage-how-you-drive (MHYD) car insurance policies

Products

Car usage insurance products typically refer to the telematics and data recording technology that innovative policies utilise. These products allow insurers to collect vital information about vehicles to ensure accurate and fair premiums. The car insurance products expected to grow with the global market are:

• OBD-Dongles

• Smartphone applications

• Black-boxes 

Vehicles

The usage insurance industry covers a plethora of vehicles, from collectable cars to 400-tonne shipping vessels. However, some vehicle classes are contributing more to the global growth of the usage insurance industry. The classifications of vehicles expected to contribute largely to the increase in market growth are:

• Passenger vehicles

• Commercial vehicles

Leading competitors in the international usage insurance market

The Fact.MR survey outlined the leading global competitors in the usage insurance industry, which are as follows:

• UnipolSai Assicurazioni S.p.A

• Groupama

• Generali Group

• UNIQA Insurance Group AG

• State Farm

• Allstate Insurance Company

• Insure the Box Limited

The importance of telematics in the usage insurance industry

Telematics technology is paving the road for the usage insurance industry. Besides its technological benefits, such as instant and accurate data access, it’s also playing a role in the psychological habits of drivers. PAYD policies benefit extensively from including telematics technology in their provision of service. Not only do the insurers benefit, but so do the policyholders. The policies essentially reward drivers for good driving practices. Thanks to telematics devices, like an OBD-Dongle, insurers can collect information that outlines the driving habits of their policyholders. This is a massive incentive for drivers to drive well.

Statistics show that drivers under a PAYD policy are actually in fewer accidents and are less likely to commit traffic violations. The benefits and evidence of opportunity in the usage insurance industry are staggeringly high. Communities, insurers and policyholders all benefit from the growing rise of telematics technology in usage insurance. 

Conclusions from the Fact.MR survey

• The most vital and clearly impressive conclusion of the survey is that the global market value for usage insurance may increase by 500% in the next decade.

• A striking conclusion from the survey that truly outlines the popularity of PAYD policies is that the demand for PAYD policies comprises 55% of global usage insurance revenue.

• By 2031, the Asia market for usage insurance has an exceptional CAGR of 15%, while Europe has an expected CAGR of 10%.

• Telematics insurance products, such as OBD-Dongles, are becoming increasingly popular and may contribute extensively to the growth rate of usage insurance over the next 10 years.

The Fact.MR survey shows the opportunities in a PAYD policy are overwhelmingly high and the benefits are staggeringly abundant. If you’re considering jumping on board, consider one of Australia’s first insurance companies to utilise advanced telematics technology- KOBA Insurance.

Get a quote online to learn the benefits of usage insurance.

Any advice provided on this site is general advice only and does not take into account your individual needs, objectives or financial situation. Terms, limits, conditions and exclusions apply. Before making a decision, you should carefully read the Product Disclosure Statement & Financial Services Guide (PDS & FSG), and the Target Market Determination (TMD), which are available at KOBAinsurance.com.au to help you decide if the product is right for you. If you purchase a policy, KOBA receives a commission, which is a percentage of your premium, and may be entitled to a profit share if certain thresholds are met in agreed periods. Please ask us for more details.