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Usage-Based Insurance Market Size Trajectory: Key Numbers Every Industry Stakeholder Should Know
The usage-based insurance market has seen substantial growth recently. It is forecast to expand from $82.7 billion in 2025 to $105.97 billion in 2026, achieving a compound annual growth rate (CAGR) of 28.1%. This historical expansion can be linked to the development of connected vehicle technologies, a rise in vehicle ownership, the early embrace of pay-as-you-drive insurance, the spread of mobile insurance platforms, and a greater emphasis on driver safety monitoring.
The usage-based insurance market size is projected to experience substantial expansion over the coming years. It is forecast to grow to $243.32 billion in 2030, achieving a compound annual growth rate (CAGR) of 23.1%. This anticipated growth during the forecast period is driven by factors such as the increasing adoption of connected and electric vehicles, a rising demand for customized insurance products, the evolution of AI-driven risk assessment, the broader implementation of smart mobility solutions, and supportive regulatory frameworks for telematics-based insurance. Key developments expected during this period include a greater embrace of telematics-powered insurance frameworks, increased utilization of real-time driving behavior analysis, the broader deployment of smartphone-based UBI programs, the expansion of personalized insurance pricing, and a heightened focus on risk-centric premium models.
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What Is Behind The Rising Demand In The Usage-Based Insurance Market?
The increasing scale of the automotive sector is anticipated to fuel the expansion of the usage-based insurance market in the near future. The automotive sector encompasses a wide array of enterprises and entities engaged in the conceptualization, engineering, manufacturing, promotion, and distribution of vehicles. Vehicle owners are drawn to telematics-enabled usage-based insurance because it offers reduced premiums for safe driving practices and higher costs for riskier behaviors. Consequently, individuals have the opportunity to significantly decrease their insurance expenses by improving their driving behavior. To illustrate, data from 2023, provided by the Organisation Internationale des Constructeurs d’Automobiles (OICA), a France-based international association of automobile manufacturers, indicates that the global automotive industry in 2023 witnessed substantial growth that year, with overall vehicle manufacturing climbing to 93546599 units, representing a considerable rise from the 85016728 units manufactured in 2022. Thus, the expansion within the automotive sector directly contributes to the development of the usage-based insurance market.
Usage-Based Insurance Market Segment Coverage And Subsegment Analysis
The usage-based insurance market covered in this report is segmented –
1) By Vehicle Type: Light-Duty Vehicle (LDV), Heavy-Duty Vehicle (HDV)
2) By Technology: On-Board Diagnostic (OBD)-II-Based UBI Programs, Smartphone-Based UBI Programs, Black-Box-Based UBI Programs, Other Technologies
3) By Package Type: Pay-As-You-Drive (PAYD), Pay-How-You-Drive (PHYD), Manage-How-You-Drive (MHYD)
Subsegments:
1) By Light-Duty Vehicle (LDV): Passenger Cars, SUVs, Light Trucks
2) By Heavy-Duty Vehicle (HDV): Buses, Heavy Trucks, Commercial Vehicles
Usage-Based Insurance Market Future Trends: Where Is The Industry Heading?
Leading firms in the Usage-Based Insurance (UBI) sector are concentrating on creating sophisticated solutions, like telematics-powered premium modification systems, to improve individualized pricing and encourage safer driving practices. Such a system leverages driving behavior data, including speed, time of day, fatigue levels, mobile phone distraction, and road hazards, to determine insurance expenses. These calculations accurately reflect an individual’s driving safety and frequency, empowering drivers to manage their premiums and fostering better driving habits. As an example, in September 2023, Definity Financial Corporation, a Canadian property and casualty insurance provider, introduced Sonnet Shift. This product incorporates advanced telematics, supported by The Floow and Munich Re Global Consulting, primarily basing its pricing on individual driving behaviors and preferences. Sonnet Shift provides quarterly price alterations determined by recent driving scores, enabling drivers to potentially save up to 35 percent on car insurance for safe driving and up to 10 percent for reduced mileage. Furthermore, the system delivers customized advice aligned with driving habits and grants customers 24/7 access to their driving data via a mobile application, where anticipated discounts or surcharges are updated weekly. Additionally, Sonnet Shift allows passengers to mark non-driving journeys for precise data collection and is designed to support future expansion beyond Ontario.
Usage-Based Insurance Market Top Players List For 2026
Major companies operating in the usage-based insurance market are Progressive Corporation, Allstate Corporation, Allianz SE, AXA, Liberty Mutual Insurance, State Farm Mutual Automobile Insurance Company, American International Group Inc, Nationwide Mutual Insurance Company, UNIPOLSAI ASSICURAZIONI S.P.A, Mapfre S.A., Aviva Group, Metromile Inc, Amica Mutual Insurance Company, Intact Financial Corporation, CAA Insurance, The Co-operators Group Limited, Desjardins Insurance, Adamjee Insurance Company Limited, Santam, Hollard Group
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How Does The Usage-Based Insurance Market Vary By Region?
North America was the largest region in the usage-based insurance (UBI) market in 2025. The regions covered in the 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.
