Automotive UBI (Usage-based Insurance) Market, Global Outlook and Forecast 2024-2030

MARKET INSIGHTS

Global Automotive UBI (Usage-based Insurance) market size was valued at USD 2,325 million in 2023. The market is projected to grow from USD 2,785 million in 2024 to USD 8,260 million by 2030, exhibiting a CAGR of 19.8% during the forecast period.

Automotive Usage-Based Insurance (UBI) represents a paradigm shift in auto insurance, leveraging telematics technology to assess risk based on actual driving behavior rather than traditional actuarial factors. These programs utilize OBD-II dongles, smartphone apps, or embedded vehicle systems to monitor parameters including mileage, acceleration patterns, braking intensity, cornering behavior, and time-of-day usage - transforming raw data into personalized premium calculations. The ecosystem comprises two dominant models: Pay-As-You-Drive (PAYD) which bases premiums primarily on mileage, and Pay-How-You-Drive (PHYD) incorporating advanced behavioral analytics.

Market expansion is being propelled by the proliferation of connected car technologies, with over 45% of new vehicles now featuring embedded telematics as standard. Regulatory support, particularly in Europe's GDPR-compliant data sharing frameworks, has accelerated insurer adoption. North America currently dominates with 58% market share (2023), though Asia-Pacific shows the fastest growth at 24.3% CAGR due to smartphone penetration exceeding 75% in key markets. Major players like Progressive and Allstate are enhancing their offerings with AI-driven risk modeling, while insurtech startups introduce gamified rewards programs - collectively driving the industry toward a projected 110 million UBI policies globally by 2027.

MARKET DYNAMICS

MARKET DRIVERS

Rising Adoption of Telematics Technology Accelerates UBI Market Growth

The automotive UBI market is experiencing rapid expansion due to widespread adoption of telematics systems across passenger and commercial vehicles. Insurers increasingly leverage telematics devices to monitor driving behavior, enabling more accurate risk assessment and premium calculation. Currently over 50% of new vehicles sold globally come equipped with factory-installed telematics, creating immediate access to driving data without additional hardware. This eliminates a major adoption barrier while providing insurers with richer datasets to refine their pricing models. The convergence of IoT and 5G networks further enhances data transmission capabilities, allowing real-time monitoring of driving patterns and vehicle diagnostics.

Consumer Demand for Fair Pricing Models Fuels Market Expansion

Growing dissatisfaction with traditional insurance models based primarily on demographic factors is driving consumer interest in UBI programs. Younger drivers and low-mileage motorists particularly benefit from pay-as-you-drive (PAYD) models, with potential savings reaching 30-40% compared to conventional policies. The transparency of UBI pricing aligns with modern consumer expectations for personalized, data-driven services across industries. Recent surveys indicate over 60% of policyholders would switch insurers for more accurate, behavior-based pricing, creating strong market incentives for insurance providers to develop competitive UBI offerings.

Regulatory support for usage-based models continues to strengthen globally, particularly in markets seeking to reduce accident rates and promote road safety. Several European governments now mandate telematics solutions for young drivers, while North American states increasingly provide regulatory frameworks enabling insurers to offer UBI programs with greater flexibility.

➤ For instance, recent legislation in multiple U.S. states specifically authorizes the use of smartphone-based telemetry as valid proof for UBI programs, dramatically reducing implementation costs.

Furthermore, strategic partnerships between automakers and insurance providers are creating embedded UBI solutions, removing friction from the customer onboarding process and stimulating market growth.

MARKET CHALLENGES

Data Privacy Concerns Create Adoption Barriers

Despite strong growth potential, UBI adoption faces significant challenges regarding data privacy and consumer trust. Many policyholders remain hesitant to share detailed driving behavior data due to concerns about how insurers might use this information beyond premium calculation. The collection of location data, speed metrics, and driving patterns raises legitimate privacy questions, with surveys indicating nearly 40% of consumers cite data security as their primary deterrent to UBI enrollment.

Other Challenges

Technology Fragmentation
The lack of standardization across telematics platforms creates integration challenges for insurers operating in multiple markets. Different vehicle manufacturers utilize proprietary data formats and transmission protocols, forcing insurers to maintain multiple technology stacks for data processing and analysis.

Consumer Education Gaps
Misconceptions about how UBI programs work continue to hinder adoption. Many potential customers mistakenly believe telematics devices will automatically result in premium increases, rather than recognizing the potential savings opportunities from demonstrating safe driving habits.

MARKET RESTRAINTS

High Implementation Costs Slow Market Penetration

While UBI demonstrates clear long-term benefits, the upfront investment required for technology infrastructure and data analytics capabilities presents a significant barrier for many insurers. Developing proprietary scoring algorithms and building the necessary IT systems to process telematics data requires substantial capital expenditure, limiting adoption primarily to larger insurance providers. Smaller regional insurers often lack the technical resources to compete, potentially leading to market consolidation.

Furthermore, the variable accuracy of different telematics solutions creates underwriting challenges. Inconsistent data quality from smartphone-based tracking versus onboard diagnostic (OBD) devices versus factory-installed telematics requires sophisticated normalization processes, adding to operational complexity and cost.

MARKET OPPORTUNITIES

Emerging Markets Present Significant Growth Potential

Developing economies represent the next frontier for UBI expansion, particularly in regions experiencing rapid motorization combined with limited traditional insurance penetration. Markets in Southeast Asia and Latin America show particular promise, where insurance providers can leapfrog legacy systems and implement UBI as a primary option rather than a supplemental product. These regions benefit from high mobile penetration rates, making app-based UBI solutions immediately accessible to millions of potential customers.

The integration of UBI with broader mobility services creates additional opportunities. Insurers are increasingly partnering with ride-sharing platforms, car subscription services, and fleet operators to offer dynamic coverage models. These partnerships allow for innovative pricing structures based on actual usage patterns rather than fixed terms, aligning insurance costs more closely with individual mobility needs.

Advancements in artificial intelligence and machine learning continue to enhance UBI offerings, enabling more sophisticated risk modeling and predictive analytics. These technological improvements allow insurers to identify nuanced risk factors beyond basic driving metrics, potentially creating more granular and accurate pricing models while expanding the addressable market.

Segment Analysis:

By Type

Pay-As-You-Drive (PAYD) Segment Leads Due to Consumer Preference for Mileage-Based Pricing

The market is segmented based on type into:

• Pay-As-You-Drive (PAYD)

  • Subtypes: OBD-II devices, Smartphone apps, and others

• Pay-How-You-Drive (PHYD)

  • Subtypes: Behavior-based scoring, Real-time feedback systems, and others

• Manage-How-You-Drive (MHYD)

• Others

By Application

Personal Segment Dominates Due to Growing Demand for Individualized Insurance Solutions

The market is segmented based on application into:

• Personal

• Business

  • Subtypes: Fleet management, Rental services, and others

By Technology

Smartphone-Based Solutions Gain Traction Due to Low Implementation Costs

The market is segmented based on technology into:

• OBD-II Devices

• Smartphone-Based

• Black Box Solutions

• Embedded Telematics

COMPETITIVE LANDSCAPE

Key Industry Players

Insurers Compete Through Telematics Innovation and Customer-Centric UBI Solutions

The automotive UBI market exhibits a dynamic competitive environment where traditional insurers, insurtech startups, and technology providers vie for market share through differentiated offerings. Progressive Corporation and Allstate Insurance dominate the North American market, together accounting for over 35% of UBI policy adoption in 2023. Their leadership stems from early investments in telematics platforms like Snapshot (Progressive) and Drivewise (Allstate), which leverage behavioral data analytics to offer personalized premiums.

In Europe, AXA and Unipol have emerged as frontrunners, capitalizing on stringent EU data privacy regulations and advanced vehicle connectivity infrastructure. These insurers differentiate through value-added services including real-time driver coaching, stolen vehicle recovery systems, and predictive maintenance alerts - features that have increased customer retention rates by 22% compared to traditional policies.

The competitive landscape is further energized by insurtech disruptors such as Root Insurance and Miles Ltd., who leverage smartphone telemetry and AI-driven risk models to challenge incumbents. Their asset-light approaches and frictionless digital experiences appeal particularly to younger demographics, driving a 180% year-over-year growth in mobile-based UBI policies since 2021.

Strategic partnerships represent another critical battleground, with State Farm recently collaborating with automotive OEMs to embed telematics solutions directly into vehicle infotainment systems. This integration eliminates the need for external dongles or apps, creating seamless data flows that improve underwriting accuracy while enhancing customer convenience.

List of Prominent Automotive UBI Providers

• Progressive Corporation (U.S.)

• Allstate Insurance (U.S.)

• GEICO (U.S.)

• Nationwide Mutual Insurance (U.S.)

• State Farm (U.S.)

• Root Insurance (U.S.)

• Amica Mutual Insurance (U.S.)

• AmericanFamilyInsurance (U.S.)

• AXA (France)

• ADAC Autoversicherung AG (Germany)

• Unipol (Italy)

• Bajaj Allianz General Insurance (India)

• Hotai Insurance (Taiwan)

AUTOMOTIVE UBI (USAGE-BASED INSURANCE) MARKET TRENDS

Integration of AI and Telematics to Revolutionize Insurance Pricing Models

The automotive UBI market is witnessing a paradigm shift as artificial intelligence (AI) merges with advanced telematics to create highly accurate risk assessment models. Insurers are increasingly leveraging machine learning algorithms to analyze driving patterns, including acceleration, braking intensity, cornering speeds, and time-of-day usage, enabling dynamic premium adjustments. Modern UBI programs now incorporate real-time data streams from connected vehicles, with estimates suggesting over 70% of new UBI policies in mature markets utilize smartphone-based telematics due to lower implementation costs. This technological synergy allows insurers to reduce claim ratios by up to 40% while offering policyholders discounts ranging from 15-30% for demonstrated safe driving behaviors.

Other Trends

Regulatory Push for Data Standardization

Government mandates across multiple jurisdictions are accelerating UBI adoption through standardized data-sharing frameworks. The European Union's revised Insurance Distribution Directive now explicitly accommodates telematics-based policies, while several US states have enacted legislation requiring insurers to disclose data collection methods. This regulatory clarity has prompted a 28% year-over-year increase in PHYD (Pay How You Drive) scheme enrollments, as consumers gain confidence in usage-based premium calculations. Simultaneously, emerging markets like India and Brazil are developing national telematics infrastructures to support UBI scalability.

Consumer Demand for Personalized Insurance Products

The digital transformation of insurance ecosystems is driving unprecedented demand for behavior-based coverage options. Millennial and Gen Z drivers—who constitute 58% of the current addressable market—demonstrate a 3.2x higher preference for UBI over traditional policies according to recent industry surveys. This demographic shift coincides with broader expectations for transparent, usage-responsive pricing across service industries. Leading insurers are responding with hybrid UBI models that combine PAYD (Pay As You Drive) mileage tracking with PHYD behavior metrics, creating tiered premium structures that can adjust monthly. The Asia-Pacific region shows particularly strong growth potential, with China's UBI market expanding at 34% CAGR as domestic insurers partner with automakers to pre-install telematics hardware.

Regional Analysis: Automotive UBI (Usage-Based Insurance) Market

North America
North America dominates the global UBI market, driven by the rapid adoption of telematics, strong regulatory support for data-sharing, and a mature automotive insurance sector. The United States, the largest contributor, witnessed a 24% year-on-year growth in UBI policies in 2023, fueled by insurers like Progressive and State Farm offering app-based driving behavior tracking. Canada follows suit with government-backed initiatives to integrate UBI frameworks with provincial insurance programs. Higher smartphone penetration (over 90%) and consumer willingness to share driving data incentivize insurers to expand PAYD (Pay As You Drive) and PHYD (Pay How You Drive) models. However, persistent concerns around data privacy and hefty initial infrastructure costs slow full-scale deployment in certain regions.

Europe
Europe, particularly Western Europe, stands at the forefront of regulatory-driven UBI adoption, with the European Union promoting telematics under stringent GDPR compliance. Italy and the UK lead with over 12 million active UBI policies as of 2023, attributed to rising fuel costs encouraging low-mileage drivers to opt for PAYD schemes. Germany emphasizes PHYD models linked with OEM telematics in luxury vehicles. The Scandinavian markets, with high trust in digital solutions, witness rapid growth in usage-based fleet insurance for commercial vehicles. Despite these advancements, fragmented insurance regulations across EU member states and consumer skepticism about continuous data monitoring pose challenges for pan-European UBI standardization.

Asia-Pacific
The Asia-Pacific region is the fastest-growing UBI market, projected to exceed a 25% CAGR through 2030, led by China’s booming connected car ecosystem and India’s insurtech startups. China mandates factory-fitted telematics in new vehicles, directly enabling insurers like Ping An to offer real-time PHYD solutions. Japan sees traction with UBI bundled with automotive services from players like Toyota’s KINTO. India remains a high-potential market with flexible regulatory sandboxes allowing usage-based pilot programs; however, low consumer awareness and inadequate 4G coverage in rural areas hinder scalability. Southeast Asian countries, such as Thailand, focus on UBI for ride-hailing fleets to reduce claim ratios.

South America
South America demonstrates gradual UBI adoption, with Brazil leading through partnerships between insurers (e.g., Porto Seguro) and telematics providers. Economic volatility pushes drivers toward PAYD models to reduce fixed insurance costs, but low vehicle connectivity and underdeveloped data infrastructure constrain innovation. Argentina shows promise with regulatory reforms encouraging usage-based commercial vehicle insurance. Chile and Colombia experiment with mobile-only UBI solutions, yet price-sensitive consumers resist premium hikes linked to driving behavior analytics. Political instability and currency fluctuations further deter long-term investments in telematics by regional insurers.

Middle East & Africa
The Middle East & Africa exhibit nascent UBI growth, primarily in Gulf Cooperation Council (GCC) countries like the UAE and Saudi Arabia, where high-end vehicle penetration supports OEM-driven telematics programs. South Africa remains the only Sub-Saharan market with active UBI pilots, targeting urban youth via smartphone-based solutions. While infrastructure gaps and low digital literacy impede mass adoption, the region’s expanding ride-sharing industry and government smart-city initiatives present future opportunities. Regulatory hurdles, particularly around cross-border data transfer, however, delay the standardization of UBI frameworks.

Report Scope

This market research report offers a holistic overview of global and regional markets for the forecast period 2025–2030. It presents accurate and actionable insights based on a blend of primary and secondary research.

Key Coverage Areas:

• ✅ Market Overview

  • Global and regional market size (historical & forecast)

  • Growth trends and value/volume projections

• ✅ Segmentation Analysis

  • By product type or category

  • By application or usage area

  • By end-user industry

  • By distribution channel (if applicable)

• ✅ Regional Insights

  • North America, Europe, Asia-Pacific, Latin America, Middle East & Africa

  • Country-level data for key markets

• ✅ Competitive Landscape

  • Company profiles and market share analysis

  • Key strategies: M&A, partnerships, expansions

  • Product portfolio and pricing strategies

• ✅ Technology & Innovation

  • Emerging technologies and R&D trends

  • Automation, digitalization, sustainability initiatives

  • Impact of AI, IoT, or other disruptors (where applicable)

• ✅ Market Dynamics

  • Key drivers supporting market growth

  • Restraints and potential risk factors

  • Supply chain trends and challenges

• ✅ Opportunities & Recommendations

  • High-growth segments

  • Investment hotspots

  • Strategic suggestions for stakeholders

• ✅ Stakeholder Insights

  • Target audience includes insurers, telematics providers, automotive OEMs, investors, regulators, and policymakers

FREQUENTLY ASKED QUESTIONS:

What is the current market size of Global Automotive UBI Market?

-> The global automotive UBI market was valued at USD 2,325 million in 2023 and is projected to reach USD 8,260 million by 2030, growing at a CAGR of 19.8% during 2025-2030.

Which key companies operate in Global Automotive UBI Market?

-> Key players include Allstate Insurance, Progressive Corporation, State Farm, AXA, GEICO, Nationwide Mutual Insurance, and Bajaj Allianz General Insurance, among others.

What are the key growth drivers?

-> Key growth drivers include rising adoption of telematics, demand for personalized insurance, connected vehicle proliferation, and regulatory support for data-driven insurance models.

Which region dominates the market?

-> North America leads in market share (42% in 2023), while Asia-Pacific shows the highest growth potential with 23.1% projected CAGR through 2030.

What are the emerging trends?

-> Emerging trends include AI-powered risk assessment, mobile app-based UBI solutions, integration with smart city infrastructure, and pay-per-mile insurance models.