The global telematics-based auto insurance market is expected to expand at a rapid pace with the rollout of connected car technologies, increase in demand for usage based insurance (UBI), and enhancements in telematics systems in the next decade.
Telematics-based car insurance uses devices installed in cars to track driving behavior so that insurance companies can offer a premium based on how a particular person drives. Not only does this strategy incentivize safer driving practices, but it also provides financial savings opportunities for responsible drivers within their customer base.
When insurers make use of telematics data in the decision-making process, they can deliver much more accurate risk assessments. Moreover, the growing penetration of advanced telematics solutions along with positive regulatory supports is also expected to boost the growth of market. The report indicates that this market will grow from USD 3,542.1 Million in 2025 to USD 19,339.7 Million by 2035, at a Compound Annual Growth Rate (CAGR) of approximately 18.5% during 2025 to 2035.
Key Market Metrics
| Metric | Value |
|---|---|
| Market Size in 2025 | USD 3,542.1 Million |
| Projected Market Size in 2035 | USD 19,339.7 Million |
| CAGR (2025 to 2035) | 18.5% |
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Due to the growing market of advanced automotive technologies and increasing focus on driver safety, North America contributes a major share of the telematics-based auto insurance market.
The United States, for example, has seen the use of telematics systems proliferate with insurers providing UBI policies that reward drivers for safe driving behaviors. Additionally, the presence of key telematics service providers and supportive regulatory frameworks aid them in contributing to the growth of the market in this region.
The telematics-based auto insurance market in Europe is steadily growing, driven by regulatory policies designed to promote road safety, and environmental friendly practices. Countries like UK, Germany, and Italy lead the pack, where telematics data are utilized by insurers to provide customized insurance products.
The demand for UBI has also been bolstered by growing consumer awareness regarding the benefits associated with UBI in addition to telematics integration in the fleet management, further leading the growth of this market in this region.
India, Australia, South Korea, Japan and China are the major countries driving the growth; the Asia-Pacific dominates the road safety market, due to rapid urbanization, increasing ownership of road vehicles and rising importance of road safety.
Buy from Software Companies as Growth in Telematics Service Providers in Countries such as China, Japan and India Driving Demand for Auto Insurance Based on Telematics This particular region is also characterized by an increase in the penetration of smartphones along with advancements in mobile networks stimulating the adoption of telematics solutions.
Data Privacy Concerns, High Initial Setup Costs, and Consumer Skepticism
The telematics-based auto insurance market is challenged by data security and user privacy, since insurers collect sensitive driving-related information such as speed, location, and braking patterns. Concerns over how insurers utilize this data particularly for pricing and claims decisions has hindered adoption in some markets.
In addition, the telematics device, mobile app, and analytics infrastructure costs are great for small insurers or in price-sensitive areas. Consumer skepticism still hampers progress, particularly for drivers who do not appreciate immersion-tech or whom frown on continual monitoring and potential penalization based on their aggressive driving patterns.
Pay-As-You-Drive Models, Accident Prevention, and Connected Vehicle Ecosystems
These barriers have not stopped the rapidly growing usage-based insurance (UBI), pay-how-you-drive (PHYD) and pay-per-mile program market with their promise of high cashback and incremental profitability. These models target low-mileage drivers, young drivers and fleets set on personalized insurance timbre. Telematics allows insurers to evaluate risk accurately, eliminate fraud, and incentivize safe driving behavior.
As OEM telematics hardware is increasingly integrated into new automobiles and more insurers are leveraging OEM data feeds, insurers can expand their offerings quickly without the cost and operational overhead of fitting aftermarket devices.
New innovations in real-time driver coaching, AI-powered claims handling and crash detection are enhancing customer engagement and driving down claim resolution times. Increasing adoption of connected vehicles, EVs and autonomous driving systems generates long-term opportunities for insurers in tandem with smart mobility and fleet intelligence solutions.
During 2020 to 2024, demand for telematics-based insurance increased as a result of higher remote work, less vehicle use, and new interest in pay-how-you-drive insurance models. Insurers began to offer pilot UBI programs and mobile-based driving behavior tracking especially for younger policyholders and urban commuters. Yet it was restrained by regulatory delays and low customer retention from widespread adoption in certain areas.
The integration of telematics into standard policy frameworks, powered by vehicle-to-everything (V2X) communication, cloud-based data sharing, and onboard diagnostics integration, will see the market explode from 2025 to 2035.
Insurance will be hyper-personalized based on driver scores, route risk assessments and AI insights from behavior. And we can expect data standardization and sharing frameworks from governments and regulators, which will enable greater transparency and increased consumer trust.
Market Shifts: A Comparative Analysis 2020 to 2024 vs. 2025 to 2035
| Market Shift | 2020 to 2024 Trends |
|---|---|
| Regulatory Landscape | Patchy regulations on telematics data use and consumer protection |
| Consumer Trends | Growing interest in usage-based premiums |
| Industry Adoption | Telematics pilots and app-based UBI programs |
| Supply Chain and Sourcing | Reliant on third-party dongles and app analytics |
| Market Competition | Entry of insurtech startups and mid-tier insurers |
| Market Growth Drivers | Shift to remote work and short-distance driving |
| Sustainability and Environmental Impact | Basic eco-driving reward programs |
| Integration of Smart Technologies | App-based driving scores and GPS logging |
| Advancements in Insurance Models | Pay-per-mile and limited PHYD policies |
| Market Shift | 2025 to 2035 Projections |
|---|---|
| Regulatory Landscape | Standardized data frameworks and telematics disclosure laws |
| Consumer Trends | Demand for personalized, gamified, and eco-driving insurance plans |
| Industry Adoption | Integration into all major auto insurance portfolios and EV ecosystems |
| Supply Chain and Sourcing | Use of OEM-integrated vehicle data, cloud analytics, and edge processing |
| Market Competition | Expansion by large auto insurers, mobility platforms, and embedded insurance firms |
| Market Growth Drivers | Rise of connected cars, EVs, AI-based underwriting, and regulatory incentives |
| Sustainability and Environmental Impact | Full alignment with carbon tracking, eco-driving incentives, and ESG scoring |
| Integration of Smart Technologies | Advanced telematics with IoT, AI crash detection, and V2X risk mapping |
| Advancements in Insurance Models | Real-time premium adjustments, multi-modal insurance, and autonomous driving coverage |
Strong penetration of basic telematics offering in fleet and personal segments, a well-defined USA tech acceptance cycle in which auto insurers, both major and insurtech, thrive, make the USA the largest of all markets for this space. Telematics programs have morphed to use smartphone apps, OEM integrations, and driver coaching features that enhance both policyholder retention as well as claims accuracy.
| Country | CAGR (2025 to 2035) |
|---|---|
| USA | 18.6% |
Telematics-based insurance in the UK is a mature concept, especially if you are a young driver or a city commuter. Insurers are moving from black box devices to app-based policies and real-time pricing, with regulatory support for transparent data practices and rewards for safer driver behaviors.
| Country | CAGR (2025 to 2035) |
|---|---|
| UK | 18.3% |
Once again, smart mobility policies and vehicle data accessibility rules for standardization of telematics adoption across EU countries allows optimizing potential across member states. Telematics penetration is led by OEM partnerships, eco-driving campaigns and real-time accident notification systems in France, Italy, and Germany.
| Region | CAGR (2025 to 2035) |
|---|---|
| EU | 18.5% |
Japan’s market is developing via partnerships between insurers, automotive makers, and tech companies. It is being integrated on EV ecosystems and advanced driver-assistance systems, particularly related to elderly driver safety and fleet applications.
| Country | CAGR (2025 to 2035) |
|---|---|
| Japan | 18.4% |
This is aligned with South Korea's smart city, 5G and autonomous mobility initiatives, in which it has embraced telematics Telcos and automakers are teaming with AI-driven UBI models to deliver real-worth feedback and in-app insurance customization to young urban drivers, while broader coverage is on offer.
| Country | CAGR (2025 to 2035) |
|---|---|
| South Korea | 18.6% |
Telematics-based auto insurance is most prevalent in passenger cars and commercial vehicles segments, wherein, insurers and fleet operators examine drivers' real-time driving data to measure risk, provide incentives for safe behavior, and override claims. This combination of vehicle profilers, separated by category, provides different personal and commercial risk profiles, further enhanced through telematic integration.
Passenger Cars Lead Market Demand as Insurers Target Individual Policyholders with Personalized Premiums
Passenger cars have led the way in telematics-based insurance programs, stimulated by consumer appetite for fair pricing, safe driver rewards and connected vehicle features. In contrast to flat-rate models, policies based on telematics analyze driving behavior data, including speed, braking, and mileage, to set premiums.Adoption has been driven by increasing interest in pay-how-you-drive and pay-as-you-drive models among urban drivers and tech-savvy policyholders.
Smartphone-based telematics apps and plug-in devices have also made it more available, extending market reach even to older vehicles.The implementation of gamification, driving score dashboards, and real-time feedback has increased engagement, promoting responsible driving and contributing to higher customer loyalty.
AI-powered analytics, predictive risk scoring, and fraud detection algorithms have been developed in passenger car insurance platforms, thereby optimizing underwriting accuracy and claims management.
Telematics systems for passenger cars would offer useful benefits but face hurdles like privacy issues and non-standard driving data quality. Innovations in data anonymization, opt-in program structures, and customizable data-sharing settings are helping to address these issues, reducing concerns and ensuring continued adoption.
Fleet Operators Focus on Risk Management and Cost Control As Commercial Vehicles Grow
Telematics-based insurance for commercial vehicles (such as logistics, ride-sharing, and delivery operators) holds significant traction as they are on the lookout for data-driven risk and operational efficiency insights.Adoption has been driven by the increasing need to combine driver behavior with real-time data in the offering of fleet insurance solutions. Proactive driver monitoring allows fleets to reduce accident rates and insurance claims, studies show.
The market growth of small and large fleets has been bolstered by the proliferation of multi-vehicle tracking platforms with central bridges, route analytics, and driver scoring tools.And with the consolidation of ELD compliance, fuel efficiency tracking and maintenance alerts on commercial telematics insurance platforms, the value has been further enhanced and support a range of broader fleet management goals.
Dynamic pricing models formed from real-world driving and usage hour data have improved cost predictability and risk-based policy customization.Commercial vehicle telematics insurance has their upsides, but device installation costs and driver pushback are among their challenges. However, novel wireless plug-and-play hardware, driver coaching tools, and incentives linked to policy are leading to increased adoption across fleet segments.
OBD-I and reluctance hybrid technology segments, which comprise the data collection backbone of telematics-based auto insurance, directly translate into real-time driver insights delivered through vehicle-integrated or app-connected systems.
OBD-I Technology Leads Market Demand as Cost-Effective Devices Enable Easy Telematics Deployment
OBD-I (On-Board Diagnostics) devices have boomed in the market because of their plug-and-play installation and vehicle model compatibility. OBD-I devices do not rely solely on smartphones, but rather plug directly into the vehicle’s diagnostic port, ensuring a steady flow of data. Demand for cost-effective, do-it-yourself telematics insurance solutions has pushed OBD-I utilization, especially in individual auto and small fleet insurance programs.
Market growth has been fueled by the establishment of insurers that allow driver-based customization of vehicle coverage through OBD-I readings, providing feedback on acceleration, idling and harsh braking.Advanced dual-data OBD-I units with GPS and engine health monitoring capabilities have reduced waste for insurers needing a more holistic view of risk.
While OBD-I devices are relatively easy and cheap to make, they have issues with physical theft and vehicle support. But advances in miniaturization, encryption and universal interface standards are increasing security and performance.
Multi-Channel Data for Deeper Risk Insight Brings Hybrid Telematics Systems to Life
Hybrid telematics platforms integrating hardware sensors with mobile apps and cloud-based analyticshave become increasingly popular among insurers looking for a metric-based approach to comprehensive, behavior-driven data. Increasing need for real-time driving behavior tracking across high resolution nature has led to hybrid system adoption across ADAS enabled vehicles and connected car ecosystems.
The experiments in hybrid solutions will largely be within urban mobility programs where pay-per-mile plans, insurance-for-shared-vehicles models, etc., are already in-place and have solidified their role in usage-based pricing innovation.
New tools such as advanced driver monitoring, contextual risk scoring, and incident detection are now embedded in hybrid telematics systems that are improving underwriting accuracy even further.Utilising hybrid data, AI powered risk engines, behavioural trend analysis and claims automation to enhance insurer and customer experience.
Although hybrid systems have undeniable benefits when it comes to detail and precision, they still suffer from high implementation costs and complex integration of data. Advancements in edge computing platforms, open API interoperability, and modular telematics architectures are enhancing scalability for this niche space and enabling it to maintain continued growth.
An increase in demand for usage based insurance (UBI), integration of real driving data, and telematics-based risk assessment models has fueled the growth of telematics-based auto insurance market. Vehicle telematics is being utilized by insurers to customize premiums, manage claims more effectively, and encourage safe driving.
Major contributors comprise worldwide insurance companies, telematics service platform suppliers, and also mobility analytics start-ups. For example, you will focus on innovative smartphone based telematics, car connected integrations with vehicle data or usage based ( PAYD, PHYD) offerings as well as data centric underwriting frameworks based on ML.
Market Share Analysis by Key Players & Telematics Insurance Providers
| Company Name | Estimated Market Share (%) |
|---|---|
| Progressive Corporation | 14-18% |
| Allstate Corporation (Drivewise) | 12-16% |
| State Farm Mutual Automobile Insurance | 10-14% |
| Liberty Mutual Insurance | 8-12% |
| Root Insurance Company | 6-9% |
| Other Telematics Insurance Providers | 30-40% |
| Company Name | Key Offerings/Activities |
|---|---|
| Progressive Corporation | Offers Snapshot®, a UBI program using plug-in and app-based telematics for real-time driving behavior tracking and discount evaluation. |
| Allstate Corporation | Operates Drivewise® with app-based and connected vehicle integrations to monitor speed, braking, and time of use for personalized insurance premiums. |
| State Farm | Provides Drive Safe & Save™ program, leveraging OnStar and mobile telematics for PAYD/PHYD insurance models. |
| Liberty Mutual Insurance | Uses RightTrack® to assess driver behavior via mobile and OBD-II plug-ins, offering discounts based on performance metrics. |
| Root Insurance Company | A fully app-based insurer that calculates premiums primarily through smartphone telematics and machine learning risk scoring. |
Key Market Insights
Progressive Corporation (14-18%)
Progressive’s Snapshot® program remains a benchmark in the UBI segment, combining device-based and app-based solutions to gather detailed driving behavior data and reward low-risk drivers through real-time analytics.
Allstate Corporation (12-16%)
Allstate’s Drivewise® integrates seamlessly with both smartphones and connected vehicle platforms, offering personalized feedback and driving incentives while enhancing customer engagement through gamified safety scores.
State Farm (10-14%)
State Farm’s Drive Safe & Save™ leverages built-in telematics from vehicles equipped with OnStar or other OEM platforms. The program enables PAYD discounts while maintaining low operational friction for customers.
Liberty Mutual Insurance (8-12%)
Liberty’s RightTrack® program captures high-resolution driving data and delivers tailored feedback to promote safe driving habits. Their hybrid approach supports mobile, plug-in, and connected car telematics.
Root Insurance Company (6-9%)
Root stands out as a digital-native insurer that uses smartphone sensors and AI to price premiums primarily based on actual driving behavior during a short trial period, streamlining onboarding and improving pricing fairness.
Other Key Players (30-40% Combined)
A wide array of insurers and tech firms are driving innovation through embedded vehicle partnerships, AI-powered scoring, and flexible subscription models. These include:
The overall market size for the telematics-based auto insurance market was USD 3,542.1 Million in 2025.
The telematics-based auto insurance market is expected to reach USD 19,339.7 Million in 2035.
The demand for telematics-based auto insurance is rising due to increasing focus on personalized premium models, growing adoption of connected vehicles, and the ability to monitor driver behavior in real time. Regulatory support and advances in telematics hardware and data analytics are further fueling market growth.
The top 5 countries driving the development of the telematics-based auto insurance market are the USA, UK, Germany, China, and Japan.
OBD-I and Hybrid Technologies are expected to command a significant share over the assessment period.
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