The Usage-Based Insurance Market for automotive is estimated at $ 28.43 billion in 2018 and is projected to reach $ 95.81 billion by 2025, at a CAGR of 18.95%. The growing market for connected cars services, increasing regular vehicle insurance, and increased customer acceptance of connected services.
Usage-based insurance providers should focus on open platforms for integration of any application. For instance, Octo Telematics launches its Next Generation Platform (NGP), a business and technology investment of more than USD 40 million. The platform provided open access and seamless integration ofanyApplication Programming Interface (API) as well as a fully modular insurance telematics structure, offering flexibility through mix-and-match service selection. The development of the platform as at IoT ecosystem provided innovators the scope and ability to meet the growing global demand for user-based insurance. Usage-based insurance providers should focus on such platforms with huge market demand across the world, especially Europe and the Americas.
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Manage-how-you-drive or MHYD is the fastest growing insurance market by policy type. MHYD is an extended version of PHYD which provides feedback on drivers. 18 and 25 as they are inexperienced. The MHYD system works similar to a PHYD by collecting various driving behavioral information such as harsh braking, sharp cornering, and overspeeding to rate the driver. Improve the driving behavior and ultimately reduce insurance premium. UBI companies can work together with telematics device manufacturers, insurance companies, and OEMs to develop MHYD plans that meet the requirements of different customers.
Embedded system is projected to be the fastest growing usage-based insurance market by technology. Embedded links to the use of inbuilt vehicle telematics to analyze and offer UBI services. With the growth in vehicle technology, connected cars are becoming prevalent. Connected cars offer various features which enable the use of telematics and infotainment services using the telematics device (telematics control unit). The inbuilt telematics is used to collect vehicle data and analyze the driving behavior to calculate insurance premiums. Embedded telematics is very accurate at capturing vehicle data as it is an integrated part of the system and does not require external calibration to register data. UBI providers can work directly with OEMs to capitalize on the emerging technologies of the Americas and EME and thus in developing markets. UBI service providers can therefore also offer plans for embedded systems.
The increasing popularity of usage-based insurance can become an opportunity for both core insurance providers and OEMs. Additionally, the current UBI service providers can look for market opportunities within platforms, data analytics, and devices.
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