Usage-Based Insurance Market Size:
The usage-based insurance market, valued at US$82.283 billion in 2030 from US$54.048 billion in 2025, is projected to grow at a CAGR of 8.77% through 2030.
Usage-based insurance (UBI) is a type of automotive insurance where, instead of the premium being decided on a traditional basis, it is also determined by the driver’s behavior, driving pattern, and vehicle usage. The demand for UBI is projected to witness substantial growth during the projected period due to the premium discounts allowing insurers to cut down on insurance premiums, along with the budding innovations in premium policies further catering to this demand.
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Usage-based insurance Market Overview
| Report Metric |
Details |
| Study Period |
2021 to 2031 |
| Historical Data |
2021 to 2024 |
| Base Year |
2025 |
| Forecast Period |
2026 – 2031 |
& Scope:
The Usage-based insurance market is segmented by:
- Technology: The usage-based insurance market by technology is segmented into OBD-II, smartphone, embedded system, black box, and hybrid. The next generation of onboard diagnostics (OBD), known as OBD II, has become a crucial component of the telematics and fleet management ecosystem, facilitating its use in automobiles. Fleets utilize this technology to record driving behavior, idling, distance traveled, and speed. It also identifies wear trends in vehicles and can proactively diagnose and address issues.
- Package Type: The package type is segmented into Pay-As-You-Drive and Pay-How-You-Drive. Usage-based insurance schemes like pay-you-drive and pay-how-you-drive are based on the fact that drivers pay insurance premiums based on their travel and driving behaviour instead of a fixed price based on demographics and their driving experience only. The concept of pay-as-you-drive usage-based insurance held a significant market share as it was the introductory scheme of the UBI. It is anticipated to grow greatly over the forecast period due to its growing presence in emerging countries and the rising willingness of adults to opt for this insurance type.
- Vehicle Type: The vehicle type is segmented into passenger vehicles and commercial vehicles. UBI is gaining traction across both vehicle segments since high premium rates in the majority of countries are encouraging private and commercial vehicle owners to opt for UBI plans. Further, the demand is also rising due to the growing penetration of ridesharing telematics in developed and developing countries.
- Vehicle Age: The vehicle age is segmented into new vehicles and on-road vehicles. The demand for on-road vehicles is increasing because most vehicles currently in use do not support embedded technologies. This lack of support is one of the main reasons hardware devices are becoming more popular in these vehicles, as they provide telematics insurance to users. The new vehicle usage-based insurance market is poised to grow substantially over the forecast period due to the growing adoption of connected cars that support embedded and hybrid telematics.
- Region: North America recorded a high market share due to its rapid penetration of telematics and connected cars.
Top Trends Shaping the Usage-based Insurance Market:
- Increasing Use of Telematics
Increasing utilization of telematics technologies such as GPS, accelerometers, and onboard diagnostics enables gathering comprehensive data regarding driving behaviour. UBI further helps the insurer analyze the driving-related risks such as speed, cornering, braking, and acceleration to price the insurance premium more precisely and boost the usage-based insurance market forecast.
- Technological Advancements
The market is expanding favourably due to the growing use of cutting-edge technologies like hybrid-based insurance and smartphone-based UBI. Furthermore, the demand for usage-based insurance is being accelerated by incorporating cutting-edge technologies into insurance procedures to increase accuracy in risk assessment, personalized premium computation, and real-time data analysis.
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Usage-based Insurance Market Growth Drivers vs. Challenges:
Opportunities:
- EV Adoption: The rise of electric vehicles and the gradual evolution toward autonomous driving create a significant opportunity for the UBI market. Compared to conventional car owners, EV owners generally have different driving patterns - they take shorter drives and engage in more urban driving. UBI can allow these unique driving patterns by providing variable premiums depending on the specific needs of EV drivers.
- Government Regulations: Various policies are being introduced by government agencies to guarantee road safety and lower the number of traffic accidents. For instance, to create the 2026 Road Safety Action Plan, New South Wales worked with partners, stakeholders, and members of the NSW community. Several programs were eventually developed with the help of their well-attended consultations. An overview of the engagement activities and responses obtained throughout NSW during the consultation is provided in the Engagement Summary for the 2026 Road Safety Action Plan.
Challenges:
- Data Security Concerns: Numerous data security concerns are frequently encountered in the UBI market, which could impede its expansion. There are serious concerns about illegal access and possible data breaches due to the massive collection of personal driving data, such as location, speed, and braking patterns. Furthermore, insurers must put strong security measures in place as cyber threats continue to rise.
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Usage-based Insurance Market Regional Analysis:
- North America: North America accounted for a significant percentage of the global market. Passenger cars on roads have been steadily increasing in countries such as the U.S. and Canada, raising the demand for increased driver awareness and prompting insurance companies to implement UBI programs.
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Usage-based Insurance Market Competitive Landscape:
The market is fragmented, with many notable players, including Progressive Casualty Insurance Company, Nationwide Mutual Insurance Company, Liberty Mutual Insurance, and The Travelers Indemnity Company, among others:
- Collaboration: Allstate revealed findings from a study carried out in collaboration with mobile data and analytics firm Arity in April 2024, emphasizing the advantages of utilizing its Drivewise app for cars. According to these results, Drivewise users have a 25% lower chance of being involved in a serious collision than those who do not use it. After each trip, the user-based insurance solution provides feedback on safe driving, allowing policyholders to save money.
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Usage-Based Insurance Market Scope:
| Report Metric |
Details |
| Usage-Based Insurance Market Size in 2025 |
US$54.048 billion |
| Usage-Based Insurance Market Size in 2030 |
US$82.283 billion |
| Growth Rate |
CAGR of 8.77% |
| Study Period |
2020 to 2030 |
| Historical Data |
2020 to 2023 |
| Base Year |
2024 |
| Forecast Period |
2025 – 2030 |
| Forecast Unit (Value) |
USD Billion |
| Segmentation |
- Technology
- Package Type
- Vehicle Type
- Vehicle Age
- Geography
|
| Geographical Segmentation |
North America, South America, Europe, Middle East and Africa, Asia Pacific |
| List of Major Companies in the Usage Based Insurance Market |
|
| Customization Scope |
Free report customization with purchase |
Usage-based Insurance Market Segmentation:
- By Technology
- OBD-II
- Smartphone
- Embedded System
- Black Box
- Hybrid
- By Package Type
- Pay-As-You-Drive
- Pay-How-You-Drive
- By Vehicle Type
- Passenger Vehicle
- Commercial Vehicle
- By Vehicle Age
- New Vehicles
- On-Road Vehicles
- By Region
- North America
- Europe
- Asia Pacific
- South America
- Middle East & Africa
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