Usage-based insurance to see 27% CAGR by 2026
Growth in the number of telematics-equipped vehicles hitting roads and government regulations are anticipated to propel the market.
By 2026, the global usage-based insurance (UBI) market is anticipated to increase 27.7%, compounded annually, reaching a projected value of $66.8 billion, according to MarketsandMarkets Research Pvt. Ltd.
Growth in the number of telematics-equipped vehicles hitting roads coupled with government regulations on safety and telematics services are anticipated to propel the market, the research company reports. Further, lower insurance premiums offered through UBI are expected to boost the market.
Light-duty vehicles (LDV), such as passenger cars and light commercial vehicles, are anticipated to lead the sector through 2026 in terms of adoption due to the relative ease of fitting these vehicles with OBD-II devices, black boxes and other devices leveraged by UBI insurance plans. Additionally, since LDVs are typically used by a single driver, they are ideal for these programs, according to MarketsandMarkets.
When it comes to devices, smartphones are the fastest growing technology in UBI markets, while black boxes are still in use and gaining customer acceptance.
North America is anticipated to be the leading region for UBI adoption, driven by a high rate of UBI in new and on-road vehicles equipped with telematics units. On top of this, many companies are offering hardware to enable UBI insurance plans.
Further, most cars sold in the U.S. and Canada fall into the premium category, which can see high insurance rates and lead consumers to UBI plans. MarketsandMarkets reports UBI programs can save car owners up to 30%.
While interest in UBI is growing so are concerns regarding privacy and auto telematics. Nearly 40% of U.S. motorists are somewhat or very concerned about cybersecurity and safety of connected and autonomous vehicles, according to a survey from Hartford Steam Boiler (HSB), a Munich Re division. Additionally, 35% said they feared a virus, hacking incident or other cyberattacks could damage or destroy a vehicle’s data, software or operating systems.
Among respondents, 11% drove electric vehicles. Of those drivers, half said they worried charging stations could be a point-of-entry for a cyberattack, HSB reported.
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