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Automotive Usage-Based Insurance Market Forecast: What Value Will The Market Reach By 2030?
The automotive usage-based insurance market size has experienced rapid expansion in recent years. It is anticipated to expand from $57.69 billion in 2025 to $68.07 billion in 2026, demonstrating a compound annual growth rate (CAGR) of 18.0%. The past growth is attributable to factors such as the rise in connected vehicle penetration, increasing demand for fair and usage-based pricing models, wider adoption of telematics devices, advancements in data-driven insurance underwriting, and enhanced consumer acceptance of digital insurance platforms.
The automotive usage-based insurance market is anticipated to experience substantial growth in the upcoming years. This market is projected to expand to $131.71 billion by 2030, exhibiting a compound annual growth rate (CAGR) of 17.9%. The expansion during this forecast period is driven by factors such as the increasing integration of ai-driven risk assessment, a rise in adoption among fleet operators, the expansion of embedded insurance models, an intensified focus on real-time claims management, and growing regulatory support for usage-based insurance frameworks. Key trends expected in the forecast period involve a greater adoption of telematics-based premium pricing, increased utilization of real-time driving behavior analytics, the broadening of smartphone-based ubi models, enhanced integration of driver feedback and coaching tools, and a stronger emphasis on personalized insurance products.
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Automotive Usage-Based Insurance Market Growth Catalysts And Demand Drivers
The expanding trend of vehicle ownership is anticipated to boost the growth of the automotive usage-based insurance market moving forward. Vehicle ownership refers to an individual’s or entity’s act of possessing and registering a motorized vehicle, encompassing the associated rights and responsibilities. This rise in vehicle ownership is fueled by economic prosperity, higher disposable incomes, increasing urbanization, and a growing demand for personal mobility. Automotive usage-based insurance (UBI) offers more economical premiums to safe and low-mileage drivers, providing personalized rates derived from driving behaviors, which appeals to cost-conscious car owners. An illustration of this is seen in January 2024, where a report from the Germany-based motor vehicle manufacturing company BMW Group revealed that the BMW Group achieved a new sales record last year, delivering 2,555,341 BMW, MINI, and Rolls-Royce vehicles worldwide, an increase of 6.5% compared to the previous year. Furthermore, in the fourth quarter of 2023, sales climbed 10.3% year-over-year to 718,778 units. Hence, the increasing prevalence of vehicle ownership is propelling the expansion of the automotive usage-based insurance market.
Automotive Usage-Based Insurance Market Segment Analysis And Revenue Potential
The automotive usage-based insurance market covered in this report is segmented –
1) By Type: Pay-As-You-Drive (PAYD), Pay-How-You-Drive (PHYD), Manage-How-You-Drive (MHYD)
2) By Vehicle Type: Passenger Cars, Commercial Vehicles
3) By Technology: Black Box, On-Board Diagnostics (OBD)-II, Embedded, Smartphone, Other Technologies
4) By Distribution Channel: Insurance Companies, Aggregator Platforms
5) By End-User: Individual Consumers, Fleet Owners Or Managers
Subsegments:
1) By Pay-As-You-Drive (PAYD): Distance-Based PAYD Insurance, Time-Based PAYD Insurance, Geographical PAYD Insurance
2) By Pay-How-You-Drive (PHYD): Driving Behavior-Based PHYD Insurance, Speed And Acceleration-Based PHYD Insurance, Risk-Based PHYD Insurance (Harsh Braking, Cornering)
3) By Manage-How-You-Drive (MHYD): Telematics-Driven MHYD Insurance, Driver Coaching And Feedback-Based MHYD, Risk Reduction And Safety-Enhanced MHYD
Automotive Usage-Based Insurance Market Trends Shaping Long-Term Demand
Leading companies in the automotive usage-based insurance market are concentrating on developing innovative products, such as usage-based insurance models, to provide personalized premiums, enhance customer engagement, and improve risk assessment. These usage-based insurance models utilize data gathered from a vehicle’s telematics system to evaluate driving habits like speed, distance, and frequency. This capability enables insurers to offer customized premiums, incentivize safe driving, and conduct more precise risk assessments. For instance, in August 2024, Zuno General Insurance Limited, an India-based insurance company, introduced Pay How You Drive to acknowledge safe driving practices and grant customers greater control over their insurance costs. This insurance coverage tailors car insurance premiums by linking them to individual driving behavior, which is assessed through a mobile app that provides a Zuno Driving Quotient. This innovative strategy not only provides discounts based on driving scores but also promotes safe driving practices, allowing customers to monitor their performance and earn rewards for improved driving habits.
Automotive Usage-Based Insurance Market Key Players Shaping Industry Direction
Major companies operating in the automotive usage-based insurance market are State Farm, MetLife Services and Solutions LLC, Nationwide Mutual Insurance Company, Allstate Insurance Company, Progressive Casualty Insurance Company, Chubb Limited, The Travelers Indemnity Company, Aviva plc, Government Employees Insurance Company (GEICO), MAPFRE SA, American Family Insurance, Mitsui Sumitomo Insurance Group, Bajaj Finserv Limited, Verisk Analytics Inc., Liberty Mutual Group Inc., Root Insurance Company, The Zebra, Lemonade Inc., Berjaya Sompo Insurance Berhad, Arity LLC, Octo Telematics S.p.A, Insurethebox limited, Flock Limited, Mile Auto Inc.
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Automotive Usage-Based Insurance Market Regional Analysis And Top Geography
North America was the largest region in the automotive usage based insurance market in 2025. Asia-Pacific is expected to be the fastest-growing region in the forecast period. The regions covered in the automotive usage-based insurance market report are Asia-Pacific, South East Asia, Western Europe, Eastern Europe, North America, South America, Middle East, Africa.
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Wasay has over a decade of experience in market research, data modelling, and analytics, with prior experience at GlobalData and Decision Tree Consulting Services. At The Business Research Company , he leads research operations across syndicated studies, customized consulting engagements, and the Global Market Model platform. His professional experience includes supporting organizations such as Boston Consulting Group, KPMG, and Ernst & Young. Wasay holds a degree in Electronics and Communications Engineering, postgraduate management qualifications from International Management Institute Belgium and Indian School of Business and Entrepreneurship, and completed the Integrated Program in Business Analytics from Indian Institute of Management Indore.