Usage-based insurance may have been around for a decade but its growth may just be beginning. A new study found that the global usage-based insurance market is expected to grow to $123 billion from 2016 to 2022.
The growth is expected to be at a rate of 36.4% and North America—United States and Canada—will likely grow the fastest during this period, due to increased interest from millennial drivers.
Manage-how-you-drive (MHYD) and pay-as-you-drive (PAYD) are expected to accelerate the most over time, as the programs offer a high level of freedom and flexibility. Customers will have more control over their auto insurance coverage based on their driving behavior. Motorists that drive safely without speeding, sharp corners or risky maneuvers, may even seen discounts up to 15% on their auto insurance premiums.
Why will UBI grow so rapidly? Improvements in telematics and analysis techniques will help accelerate the market’s expansion and smartphone programs will diversify options for drivers. Insurance providers that are looking to grow their digital services and obtain more accurate risk profiles will continue to offer more UBI options with additional incentives for drivers. These programs may be perfect for drivers looking for more personalization and customization in car insurance than traditional programs offer.