Usage Based Insurance Market
The market for Usage Based Insurance was estimated at $53.9 billion in 2024; it is anticipated to increase to $202 billion by 2030, with projections indicating growth to around $608 billion by 2035.
Report Summary
Market Data
Methodology
Table of Contents
Global Usage Based Insurance Market Outlook
Revenue, 2024
$53.9B
Forecast, 2034
$487B
CAGR, 2025 - 2034
24.64%
The Usage Based Insurance industry revenue is expected to be around $67.2 billion in 2025 and expected to showcase growth with 24.64% CAGR between 2025 and 2034. With tech like telematics and big data at play in UBIs rise to prominence; theres a major chance to transform how traditional insurance works in a more tailored and fair manner using live and accurate data insights, from policyholders and insurers alike.
UBI insurance is a type of vehicle insurance that adjusts based on factors, like the vehicle type used and how its driven in terms of time and distance.
Market Key Insights
- The Usage Based Insurance market is projected to grow from $53.9 billion in 2024 to $488 billion in 2034. This represents a CAGR of 24.64%, reflecting rising demand across Personal Auto Insurance, Commercial Fleet Management and Shared Mobility Services.
- Progressive Corporation, Allstate Corporation, State Farm Mutual Automobile Insurance Company are among the leading players in this market, shaping its competitive landscape.
- U.S. and Germany are the top markets within the Usage Based Insurance market and are expected to observe the growth CAGR of 23.7% to 34.5% between 2024 and 2030.
- Emerging markets including Brazil, Mexico and Indonesia are expected to observe highest growth with CAGR ranging between 18.5% to 25.6%.
- Transition like Digital Transformation in Insurance Services is expected to add $13 billion to the Usage Based Insurance market growth by 2030.
- The Usage Based Insurance market is set to add $434 billion between 2024 and 2034, with manufacturer targeting On-Board Diagnostics & Black-Box Technology Adoption projected to gain a larger market share.
- With Rising adoption of telematics technology, and Growing demand for customized insurance policies, Usage Based Insurance market to expand 805% between 2024 and 2034.
Opportunities in the Usage Based Insurance
The advancement of data and machine learning tools has also the potential to strengthen the UBI sector by enhancing risk evaluation methods and refining customer categorization and pricing strategies.
Growth Opportunities in North America and Europe
North America is a player in the Usage Based Insurance (UBI) market because of its embrace of telematics and connected cars. The competition in the market is fierce with companies such, as Allstate and Progressive dominating the field. However newcomers have a chance to bring innovation by leveraging AI and big data in usage based pricing strategies.
In Europe. In the UK and Germany. There is a promising outlook for the UBI market despite challenges posed by strict EU data privacy regulations that also promote fair competition. The growing emphasis on eco driving habits in this region presents a special chance, for insurance companies that prioritize customer centered UBI policies to expand their business.
Market Dynamics and Supply Chain
01
Driver: Rising Adoption of Telematics Technology, and Increased Connectivity Infrastructure
The growing popularity and use of telematics technology play a role in driving the Usage Based Insurance (UBI) market forward. Through telematics systems insurers can also gather information on a drivers actions such, as speed of driving, braking habits and total mileage covered. This data enables precise evaluation of risks and determination of insurance premiums. The growing presence of the Internet of Things (IoT) and improved vehicle connectivity has also given insurance companies data to enhance risk assessment and detect fraud more effectively in the usage based insurance (UBI) sector. There is also an uptick, in automotive technology alongside upgraded internet connections that is also propelling the adoption of usage based insurance plans.
Consumers are also increasingly looking for customized services these days. This preference is also driving the growth of Usage Based Insurance (UBI). The rising demand for tailor made insurance policies that cater to driving habits and risk profiles has also made UBI a favored choice, among insurance companies and customers alike.
02
Restraint: Data Privacy Concerns
Investments in Usage Based Insurance (UBI) are sometimes viewed skeptically because consumers worry about their data privacy being compromised. The need for driving data and uncertainties around its use or possible misuse create significant challenges, for the markets development. Privacy issues could discourage customers and limit the growth of UBI.
03
Opportunity: Leveraging the Power of IoT and Exploiting the Connected Car Revolution
Smart devices like gadgets such as security systems for homes and health trackers offer insurers valuable information, on insured items or people themselves; this data can be leveraged by insurance providers to offer tailored insurance rates tailored to individuals needs and habits in a more personalized manner than before—an emerging trend that has the potential to shake up the home and health insurance sectors currently dominated by traditional insurance structures.
The rise of vehicles with telematics and digital sensors offers a significant chance for Usage Based Insurance (UBI). These vehicles produce data that enables insurance companies to modify premiums according-to real driving habits This shift could lead to a transition, from conventional yearly insurance plans to flexible insurance models based on real driving habits and behavior.
04
Challenge: Technological Challenges
Deploy UBI entails the need for technological systems like cutting edge telemetry and thorough data handling setups. This may pose a challenge for smaller insurance companies or those situated in developing areas due, to the expenses associated with embracing such technology.
Supply Chain Landscape
1
Data Collection
Progressive Corp.General Motors
2
Data Processing Devices & Software
IBMMicrosoftSAP
3
Data Analysis & Risk Assessment
SAS InstituteIBMLexisNexis Risk Solutions
4
Policy Management & Administration
AccentureOracleMicrosoft
1
Data Collection
Progressive Corp.General Motors
2
Data Processing Devices & Software
IBMMicrosoftSAP
3
Data Analysis & Risk Assessment
SAS InstituteIBMLexisNexis Risk Solutions
4
Policy Management & Administration
AccentureOracleMicrosoft
Use Cases of Usage Based Insurance in Personal Auto & Commercial Fleet Management
Personal Auto Insurance : PAYD insurance is commonly known as Pay-as-you drive insurance. Falls under the category of Usage Based Insurance (UBI). It tailors premiums according-to the drivers behavior. Mileage patterns with a key focus on promoting safe driving practices for safer roads ahead! Major industry players like Progressive Allstate and State Farm are utilizing telematics technology along, with smartphone applications to collect real time driving information.
Commercial Fleet Management : Especially beneficial for companies that oversee fleets of vehicles Uusage based insurance (UBI) enables monitoring of driver conduct and vehicle condition as well as fuel usage tracking. The main advantage lies in the financial savings and enhanced operational effectiveness it brings to businesses. Verizon Connect and Geotab are providers in this field, with extensive UBI offerings.
Shared Mobility Services : UBI is becoming more popular in ride hailing and car sharing services such as Uber and Zipcar where insurance costs are determined by how the vehicle is used to offer cost effective coverage choices for users in this sector. It also meets the needs of gig economy workers with its approach. Market frontrunners, like Metromile and Nationwide offer usage based insurance that adjusts coverage based on the miles traveled.
Recent Developments
In the realm of Usage Based Insurance (UBI) there has been an upsurge in market activity due to advances in technology observeded. The rise is largely attributed to the evolution of digital technologies like IoT (Internet of Things) and telematics innovations that are shaping the current trends, in UBI and are forecasted to remain influential moving forward.
December 2024 : Progressive Insurance introduced an AI driven Usage Based Insurance (UBI) system to tailor premium rates according-to driver habits.
October 2024 : Allstate Insurance has expanded its usage based insurance options to cover vehicle fleets. This move aims to offer fleet managers insights driven by data analysis.
August 2024 : Nationwide Mutual Insurance has unveiled an usage based insurance (UBI) offering aimed at young drivers. This innovative product incorporates gamification features to encourage the adoption of driving practices.
Impact of Industry Transitions on the Usage Based Insurance Market
As a core segment of the Core BFSI industry,
the Usage Based Insurance market develops in line with broader industry shifts.
Over recent years, transitions such as Digital Transformation in Insurance Services and Rise of Insurtech Companies have redefined priorities
across the Core BFSI sector,
influencing how the Usage Based Insurance market evolves in terms of demand, applications and competitive dynamics.
These transitions highlight the structural changes shaping long-term growth opportunities.
01
Digital Transformation in Insurance Services
The Usage Based Insurance (UBI) market is experiencing a transformation due to technological advancements. Insurers utilize telematics. Gps technology to track driving habits and leverage AI and machine learning algorithms to assess and evaluate risks. As a result of this evolution in the industry practices personalized insurance premiums and innovative customer services are being introduced, reshaping the insurance products offered. This marks a change as insurance firms seek data driven approaches, for risk assessment and underwriting.
02
Rise of Insurtech Companies
The UBI market is experiencing a shift, with the quick emergence of Insurtech firms that are shaking up the conventional insurance industry by prioritizing a digital focused approach to enhance customer satisfaction.