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Usage-Based Insurance Market Size Outlook: How Quickly Will Revenue Expand Through 2030?
In recent years, the usage-based insurance market size has expanded exponentially. It is projected to grow from $82.7 billion in 2025 to $105.97 billion in 2026, demonstrating a compound annual growth rate (CAGR) of 28.1%. Historically, this growth can be ascribed to factors such as the advancement of connected vehicle technologies, rising vehicle ownership rates, the early integration of pay-as-you-drive insurance, the broader availability of mobile insurance platforms, and an increasing emphasis on driver safety monitoring.
The usage-based insurance market size is anticipated to see substantial growth in the next few years. It is forecast to grow to $243.32 billion in 2030, demonstrating a compound annual growth rate (CAGR) of 23.1%. The expansion during this forecast period is attributed to the increasing penetration of connected and electric vehicles, a rising demand for personalized insurance products, the expansion of AI-driven risk modeling, a greater adoption of smart mobility solutions, and regulatory backing for telematics-based insurance. Significant trends for the forecast period include the increasing uptake of telematics-based insurance models, a rising use of real-time driving behavior analytics, the growing deployment of smartphone-based UBI programs, the expansion of personalized insurance pricing, and an enhanced focus on risk-based premium models.
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Usage-Based Insurance Market Growth Backed By Core Demand Fundamentals
The increasing size of the automotive sector is anticipated to drive the expansion of the usage-based insurance market in the future. This industry encompasses various businesses and entities responsible for the design, development, manufacturing, promotion, and distribution of vehicles. Vehicle owners find telematics-powered usage-based insurance appealing because it offers reduced premiums for safe driving behaviors and higher premiums for risky driving. Consequently, individuals have the opportunity to significantly decrease their insurance costs by modifying their driving patterns. For example, data from the Organisation Internationale des Constructeurs d’Automobiles (OICA), a France-based international automotive manufacturers’ association, indicates that global vehicle output saw considerable growth in 2023. Total production reached 93546599 units, which is a substantial rise from the 85016728 units manufactured in 2022. Thus, the expansion within the automobile sector fuels the advancement of the usage-based insurance market.
Usage-Based Insurance Market Segment Analysis Spotlighting Growth Areas
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 Growth Trends Reshaping The Competitive Landscape
Major companies operating in the Usage-Based Insurance (UBI) market are concentrating on developing sophisticated solutions, such as telematics-driven premium adjustment systems, to enhance individualized pricing and encourage safer driving behaviors. A telematics-driven premium adjustment system leverages data from driving conduct, including speed, time of day, fatigue, mobile distraction, and road risk, to calculate insurance costs that accurately reflect how safely and frequently an individual drives. This helps drivers manage their premiums and promotes improved driving patterns. For instance, in September 2023, Definity Financial Corporation, a Canada-based property and casualty insurer, introduced sonnet shift, which features advanced telematics powered by the floow and munich re global consulting. This system uses individual driving behaviors and preferences as the primary factor for pricing. The product offers quarterly price adjustments based on recent driving scores, allowing drivers to save up to 35 percent on auto insurance for safe driving and up to 10 percent for lower mileage. The system also provides personalized tips derived from driving habits and grants customers 24/7 access to driving data via a mobile app, where projected discounts or surcharges are updated weekly. Sonnet Shift further enables passengers to indicate non-driving trips for accurate data capture and is designed to support expansion beyond Ontario in the future.
Usage-Based Insurance Market Leading Companies: Who Holds The Strongest Market Presence?
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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Usage-Based Insurance Market Global Footprint: Which Region Leads The Market?
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.