The global usage-based insurance market is projected to reach US$77.25 billion by 2026, from US$25.46 billion in 2020, according to a new study by Valuates Reports. The market is expected to grow at a compound annual growth rate of 20.32% between 2020 and 2026.
The growth of usage-based insurance, which uses telematics to base premiums on the driving behaviour of consumers, is being driven largely by the increasing adoption of smartphones and connected vehicles, Valuates Reports said. Auto manufacturers are increasingly working with smartphone and tablet manufacturers to deliver products and services to be available in vehicles.
The increase in demand for electric vehicles has also fostered the creation of applications that allow customers to connect their smartphones to their cars in order to test the vehicle’s battery – which has also led to growth in the app-based usage-based insurance market.
Usage-based insurance also reduces the risk of accidents and vehicle theft, according to Valuates Reports. It tracks driving behaviour, and the same telematics can be used to locate missing or stolen vehicles via GPS.