The global Telematics-based Auto Insurance Market is anticipated to generate revenues of USD 2,513.9 million in 2023. Demand is anticipated to increase at a CAGR of 18.7% and reach USD 13,998.3 million by 2033.
The foregoing factors driving the expansion of the global demand for telematics-based auto insurance include:
Connected Cars: The automotive industry is changing its trajectory, and by 2025, more than 400 million connected vehicles are likely to be on the road. Additionally, it is anticipated that there are likely to be more than 27 billion IoT devices during that time. All these factors encourage widespread telematics insurance adoption.
Technological Developments in Telematics: Businesses that invested in telematics technology early now take satisfaction in well-developed telematics products, and have achieved a high position in this market. Insurance firms understand the significance of putting their telematics-based solutions into practice. The providers of telematics services are also aware of this value and have made investments to expand the capabilities of their products.
Growing demand for personalized insurance offerings: Traditional insurers are attempting to change to compete with digital evolution. This is likely to justify the increasing demand for automation. Insurance regulators create individualized offers to achieve efficient cost structures, competitive rates, and the customers’ demand for immediate services
| Attribute | Details |
|---|---|
| Expected Market CAGR (2023 to 2033) | 18.7% |
| Market Size (2023) | USD 2,513.9 million |
| Expected Market Size (2033) | USD 13,998.3 million |
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2018 to 2022 Demand Analysis:
With a market valuation of USD 1,159.5 million in 2018 and USD 2,146.8 million in 2022, the market was progressing with a CAGR of 16.6%. This is because historically, auto insurance providers have concentrated on factors including location, age of the driver and the vehicle, and motor vehicle reports when determining risk and premiums. This was a time- and money-consuming procedure for the key participants.
Telematics enables carriers to assess a driver's driving style to accurately predict risks and set policy prices. Auto insurance companies have seen that telematics-based insurance programs have become popular over time.
2023 to 2033 Demand Analysis:
Telematics-based auto insurers, with an anticipated market value of USD 4,204.20 million in 2026 seek to connect and automate the claims process through connectivity. This includes devices like cameras and sensors that deliver precise, real-time data. Artificial intelligence (AI) is boosting the market's income streams and causing the sector to expand 1.17 times between 2022 and 2023.
Firstly, the demand for telematics devices is rising in the automotive and insurance industries, which is fueling global market expansion. Telematic devices enhance premium pricing, how customers view a firm, and strengthen long-term connections via enhancing communication, which explains this.
Secondly, the automotive industry's growing need for regulatory compliance and the insurance telematics industry's notable adoption of IoT technology proliferate the demand for telematics-based auto insurance.
A robust ecosystem is developing around connected car services, as demand for usage-based automotive insurance is rising considerably. This ecosystem includes participants including
In plenty of ways, insurance businesses are undergoing a digital transition. For instance, machine learning or predictive modeling technologies can replace the analytics capabilities of insurance firms.
Traditional data sets containing risk profiles based on claims history are being replaced by the increasing accessibility of real-time data collection from vehicles. For those involved in the usage-based insurance sector, the rise of vehicle telematics, demand for linked car services, and mobile-based telematics are likely to present a plethora of options.
Usage-based auto insurance programs dramatically increased in the United States between January 2022 and April 2022. Depending on the operator or provider, this program results in savings of up to 30% on the insurance premium. However, price increases are what have caused the great decline in customer satisfaction.
This low level of satisfaction can be reduced by alerting clients in advance if prices are rising. In 2022, the United States obtained an 18.5% market share. The AV and EV industries undergo significant changes in the coming years, and the United States telematics-based auto insurance sector needs to adapt to the resulting disruptions.
The market in Germany was expanding at a significant rate, with a share of 7.6% in 2022. Significantly decreasing hardware costs are anticipated to boost consumer acceptability of the gadget in Europe. Additionally, the entry of well-known OEMs that provide services and warranties backed by dealerships is likely to encourage market expansion in Germany.
German automakers are progressing in the connected cars market. The nation also commands an adequate market share in Europe for auto telematics. Leading automotive OEMs are also releasing vehicles with cutting-edge connectivity and infotainment systems.
The United Kingdom is expected to have a CAGR of 18.2% by 2033. Favorable projects in the United Kingdom are:
| Country | China |
|---|---|
| Market CAGR (2023 to 2033) | 17.7% |
The automobile sector is crucial to the GDP growth of many developing nations, such as China, India, and others. The global volume of autos is predicted to record a CAGR of 3% throughout the projection period. The amount of parked cars around the world is one aspect to take into account when estimating the global potential of the telematics-based auto insurance industry.
As the amount of parked cars is anticipated to rise significantly over the world, the growth gradient of passenger vehicles (PV) becomes high than that of commercial vehicles (CV).
Product innovation in India proves to be a profitable factor. For instance, the Indian insurance sector is actively evaluating this Gen-Next product and is proceeding cautiously with its implementation. The regulator is allowing insurers to file these items under its experimental "Use and File" program.
The classic type of UBI technology that is favored by most car owners is the black box. The demand for the black box is likely to rise as telematics insurance for usage-based insurance for heavy-duty vehicles becomes prevalent.
The penetration is now leading in Europe, especially in Italy. A black box is extremely accurate and records a variety of data. However, these devices are pricey and call for specialized installation, which raises the overall upfront cost of the service.
An embedded system is replacing a black box in the UBI market. Consequently, the market share of the segment is likely to change in the future, but UBI technology continues to be widely used.
Passenger cars saw a top spot with a share of 48.5% in 2022. The increasing adoption of telematics-based auto insurance programs by passenger car owners is driven by several factors. This includes the desire for personalized insurance products and the growing awareness of the benefits of safe driving.
Telematics-based auto insurance programs in the passenger car segment typically use a small device installed in the vehicle or a mobile app. It is to collect data about driving behavior, such as speed, braking, and location. This data is then used to calculate the policyholder's insurance premium, with safe drivers typically receiving low premiums. Also, the investment in commercial applications is likely to increase technologies for autonomous passenger cars.
Safe driving practices, low mileage, and other characteristics that point to a low risk of accidents are rewarded by insurers in the telematics-based vehicle insurance market with discounts. To gather information about driving behavior, the systems often use mobile apps or devices connected to the OBD-II port on the car.
In 2020, the total investment made in telematics-based auto insurance programs is USD 7,000 million. Successful Usage-based Insurance (UBI) initiatives that support market expansion include:
| Companies | Liberty Mutual |
|---|---|
| Program | Right Track |
| Offering | RightTrack gathers information on driving behavior using a mobile app or a gadget hooked into the car's OBD-II port |
| Profit Made (2020) | USD 3,700 million |
| Companies | The Allstate Corporation |
|---|---|
| Program | Drivewise |
| Offering | It offers 10% discounts and tracked driving time and sudden stops. |
| Profit Made (2020) | USD 4,600 million |
| Companies | Progressive corporation |
|---|---|
| Program | Snapshot |
| Offering | It offers 30% discounts and tracks phone activity and distance traveled. |
| Profit Made (2020) | USD 3,700 million |
The key market players are extending their consumer bases internationally to maintain their position at the top. To increase their market share and profitability, these companies engage in tactical joint ventures. To improve the capabilities of their products, industry players are also buying up start-ups developing telematics-based auto insurance business technologies.
Some OEMs are likely to decide to enter the insurance industry, drawn by the opportunity to create new sources of income.
Recent Developments:
The market size of the telematics-based auto insurance market is USD 2,513.9 million in 2023.
Technological developments like AI and machine language are gaining popularity in the market.
North America market saw a dominant demand, with a share of 29.6% in 2022.
The classic type of UBI technology that is favored by most car owners is the black box.
Progressive Corporation, Allstate Corporation, and State Farm Mutual Automobile Insurance Company are key players in the market.
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Telematics-based Auto Insurance Market
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