The market for automotive usage-based insurance (UBI) will grow from $28.4 billion in 2018 to nearly $96 billion by 2025, according to a research report from MarketsandMarkets.
The UBI market will expand at a compound annual growth rate of nearly 19 percent between 2018 and 2025, according to the report.
The increasing number of vehicles with telematics and connected-car services, and the lower insurance premiums associated with UBI, will drive the market, the research firm noted.
The Americas is projected to lead the UBI market for automotive during the forecast period, as the region has the highest adoption rate of usage-based insurance for new and on-road vehicles equipped with either OBD II or OE-fitted telematics units, according to MarketsandMarkets.
The research firm estimates that pay-as-you-drive (PAYD) packages will be the largest market for UBI during the forecast period. Various factors affecting the dominance of PAYD are ease of deployment, no complex algorithms for working, and cost-effectiveness for the insurer as well as consumers.