Usage Based Insurance Market

Market Definition

The market encompasses the ecosystem that enables and supports insurance models based on real-time or recorded vehicle usage and driver behavior. This includes a range of insurance types such as Pay-As-You-Drive (PAYD), Pay-How-You-Drive (PHYD), and Manage-How-You-Drive (MHYD). 

The market is structured around different technological solutions used to collect and analyze driving data. These solutions include dongles, embedded systems, smartphones, and other telematics-based tools. The report outlines the primary drivers of market growth, along with an in-depth analysis of emerging trends and evolving regulatory frameworks shaping the industry's trajectory.

Usage Based Insurance Market Overview

The global usage based insurance market size was valued at USD 41.45 billion in 2024 and is projected to grow from USD 44.12 billion in 2025 to USD 71.64 billion by 2032, exhibiting a CAGR of 6.97% during the forecast period. 

The growth is driven by the rising demand for personalized insurance products and advancements in telematics technologies. Insurers are increasingly adopting UBI models to offer flexible premium structures based on individual driving behavior, promoting safer roads and rewarding responsible drivers.

Major companies operating in the usage based insurance industry are Nationwide Mutual Insurance Company, MAPFRE, Metromile, USAA, Assicurazioni Generali S.p.A., IMS, Root Inc., Progressive Casualty Insurance Company, Liberty Mutual Insurance, AXA SA, American Family Insurance, Cambridge Mobile Telematics, Allstate Insurance Company, The Travelers Indemnity Company, and Zurich Insurance Group.

AI is enabling insurers to detect patterns, automate claims processes, and deliver tailored insights. This is improving operational efficiency and strengthening customer engagement. The shift toward behavior-based insurance aligns with broader industry trends focused on customer-centric and data-driven offerings.

• In September 2023, Definity launched Sonnet Shift, Canada’s first usage-based insurance product offering quarterly premium adjustments based on driving scores. Supported by The Floow and Munich Re Global Consulting, the program gives drivers personalized control over their premiums while promoting safer driving.

Key Highlights:

1. The usage based insurance market size was recorded at USD 41.45 billion in 2024.
2. The market is projected to grow at a CAGR of 6.97% from 2025 to 2032.
3. Asia Pacific held a market share of 35.03% in 2024, with a valuation of USD 14.52 billion.
4. The pay-how-you-drive (PHYD) segment garnered USD 15.64 billion in revenue in 2024.
5. The dongle segment is expected to reach USD 23.59 billion by 2032.
6. The passenger cars segment is expected to reach USD 43.67 billion by 2032.
7. North America is anticipated to grow at a CAGR of 7.46% during the forecast period.

Market Driver

Growth in Connected Vehicle Technologies

The usage based insurance market is driven by the rapid growth of connected vehicle technologies. These technologies enable the continuous collection of real-time driving data through sensors, onboard units, and wireless communication systems. This seamless data flow allows insurers to accurately assess risk and offer dynamic, usage-based pricing. 

Moreover, the expansion of connected vehicle ecosystems is enhancing customer engagement and streamlining claim processing. Increasing integration of built-in telematics systems by automotive manufacturers is driving broader adoption of usage-based insurance solutions.

• In June 2024, Tint launched an embedded insurance solution tailored for Turo, the peer-to-peer car sharing platform. The program offers off-trip coverage for Turo hosts, protecting vehicles during business-related use such as refueling and detailing. 

Market Challenge

Ensuring Data Privacy and Security

A key challenge in the usage- based insurance market is ensuring data privacy and security. Collecting detailed driving data involves sensitive personal information, raising customer concerns about data storage and usage. These concerns impact trust and slow market adoption. 

Key players comply with strict regulations like GDPR and implement robust data protection measures. They also provide clear communication about data usage and offer users control over their information to build customer confidence and support broader acceptance.

Market Trend

Integration of AI

The market is witnessing a shift toward the integration of AI with usage based insurances. AI allows insurers to analyze vast amounts of driving data quickly and accurately. This enables better risk prediction and more precise pricing based on individual behavior. 

AI-driven models improve fraud detection and claims processing efficiency. As a result, insurers can offer personalized premiums that reflect real driving habits leading to fairer pricing for customers. This trend is enhancing customer experience and operational effectiveness across the market.

• In June 2024, Qover launched an AI-powered insurance solution aimed at accelerating claims processing and enhancing user experience. The platform enables instantaneous claim settlement following approval and integrates seamlessly with partners’ systems to improve efficiency.

Usage Based Insurance Market Report Snapshot

Segmentation	Details
By Type	Pay-As-You-Drive (PAYD), Pay-How-You-Drive (PHYD), Manage-How-You-Drive (MHYD)
By Solution	Dongle, Embedded, Smartphones, Others
By Vehicle	Passenger cars, Commercial vehicles
By Region	North America: U.S., Canada, Mexico
	Europe: France, UK, Spain, Germany, Italy, Russia, Rest of Europe
	Asia-Pacific: China, Japan, India, Australia, ASEAN, South Korea, Rest of Asia-Pacific
	Middle East & Africa: Turkey, U.A.E., Saudi Arabia, South Africa, Rest of Middle East & Africa
	South America: Brazil, Argentina, Rest of South America

Market Segmentation:

• By Type (Pay-As-You-Drive (PAYD), Pay-How-You-Drive (PHYD), Manage-How-You-Drive (MHYD)): The pay-how-you-drive (PHYD) segment earned USD 15.64 billion in 2024 due to rising demand for behavior-based premium models that reward safe driving.
• By Solution (Dongle, Embedded, Smartphones, and Others): The dongle held 33.24% of the market in 2024, due to its widespread adoption, easy installation, and reliable data accuracy for telematics.
• By Vehicle (Passenger cars, Commercial vehicles): The passenger cars segment is projected to reach USD 43.67 billion by 2032, owing to the increasing penetration of connected vehicles and growing preference for personalized insurance.

Usage Based Insurance Market Regional Analysis

Based on region, the global market has been classified into North America, Europe, Asia Pacific, Middle East & Africa, and South America.

Asia Pacific usage based insurance market share stood at around 35.03% in 2024, with a valuation of USD 14.52 billion. This dominance is driven by the rapid adoption of telematics, expanding automotive sales, and strong digital infrastructure. Countries like China, Japan, and India are witnessing increased demand for connected vehicles and personalized insurance solutions. 

Government support for intelligent transport systems and rising awareness about safe driving is further contributing to the market growth in Asia Pacific. Additionally, the region benefits from a large base of digitally proficient consumers and growing partnerships between insurers and automotive OEMs.

North America is poised to grow at a significant growth at a CAGR of 7.46% over the forecast period. This growth is driven by the region's early adoption of telematics and supportive regulatory policies that encourage innovation in automotive insurance. A well-established insurance sector, coupled with high vehicle ownership rates, ensures a steady demand for usage-based insurance solutions. 

Additionally, rising interest in risk-based pricing models and the widespread use of smartphones and connected devices are driving market expansion across the United States and Canada.

• In May 2025, Tint partnered with Escapia to launch SmartSTR Insurance, offering embedded short-term rental insurance to over 900 property management companies across the U.S. The solution delivers guest-caused damage protection, liability coverage, and seamless data integration between Escapia and Tint to reduce administrative workload.

Regulatory Frameworks

• In Europe, Usage Based Insurance falls under the broader framework of the General Data Protection Regulation (GDPR), which mandates strict guidelines on how insurers collect, store, and process telematics data. Insurers must ensure transparency and obtain explicit consent before using personal driving data.
• In Japan, the Financial Services Agency (FSA) allows telematics insurance within a regulatory framework that promotes innovation in digital insurance. Insurers must comply with the Act on the Protection of Personal Information (APPI) and demonstrate fair usage of collected data in pricing and claims processing.

Competitive Landscape

The key players in the usage based insurance market are focusing on enhancing their telematics capabilities through in-house development and partnerships with technology providers. Market players are also investing in advanced analytics platforms to offer more accurate risk profiling and personalized pricing models. 

Moreover, they are forming strategic collaborations with automotive OEMs and telecom companies to expand service offerings and ensure seamless data collection. Key players are also focusing on developing mobile-based platforms to reduce hardware dependency and improve user experience. 

Additionally, several insurers are expanding into new regional markets through digital distribution channels and localized telematics solutions. To stay competitive, market participants are refining their underwriting models and investing in AI and machine learning to process real-time driving data more efficiently.

• In April 2025, Qover partnered with BMW and MINI to launch an omnichannel embedded motor insurance platform in Ireland. The program offers flexible, digitally managed coverage for various vehicle types, including EVs and hybrids, with access to approved bodyshop repairs and genuine parts.

List of Key Companies in Usage Based Insurance Market:

• Nationwide Mutual Insurance Company
• MAPFRE
• Metromile
• USAA
• Assicurazioni Generali S.p.A.
• IMS
• Root Inc.
• Progressive Casualty Insurance Company
• Liberty Mutual Insurance
• AXA SA
• American Family Insurance
• Cambridge Mobile Telematics
• Allstate Insurance Company
• The Travelers Indemnity Company
• Zurich Insurance Group

Recent Developments (M&A)

• In June 2024, Intuit Inc. announced the acquisition of technology from mobility risk intelligence provider Zendrive to enhance Credit Karma’s usage-based auto insurance product, Karma Drive. The acquisition includes Zendrive employees joining Credit Karma to accelerate innovation.