Insurance Telematics Market Size, Share & Trends Analysis Report By Offering (Hardware, Software, Services), By Technology (OBD-II, Smartphone, Hybrid, Black-box), By Type (Pay-as-you-drive, Pay-how-you-drive, Pay-as-you-go), By Deployment (On-premise, Cloud), By Enterprise Size (Large Enterprises, Small & Medium Enterprises), By Vehicle Type (Light-Duty Vehicles (LDV), Heavy-Duty Vehicles (HDV)), By Vehicle Age (New Vehicles, Used Vehicles), By End Use (Passenger Vehicle, Commercial Vehicle) and By Region(North America, Europe, APAC, Middle East and Africa, LATAM) Forecasts, 2024-2032

Market Overview

The global insurance telematics market size was valued at USD 3.76 billion in 2023. It is expected to reach USD 17.36 billion in 2032, growing at a CAGR of 18.53% over the forecast period (2024-32). Innovations in telematics technology, including GPS systems, mobile telecommunications, and data analytics, have made it feasible for insurers to collect and analyze real-time data on vehicle usage and driver behavior. These technological advancements allow for more accurate risk assessments, customized insurance premiums, and improved claims processing.

Automobile insurance businesses utilize telematics insurance to keep tabs on their customers' driving habits in real time and, as a result, adjust their prices accordingly. It consists of establishing up a device, referred as a Black Box, in the car, which monitors and stores its many data including speed, braking patterns, driving style, distance, as well as the type of road one drives. This technology is having the capability to basically modify how auto insurance claims are processed, how risks are selected, and how fraud is detected. Numerous research & advances are being undertaken toward boosting its application globally.

Several data points are collected, measured, and transmitted by insurance telematics in order to follow driver behavior. In general, it functions as a little GPS-based gadget installed inside a car, which records locations plus monitors a number of characteristics, including speed, distance, as well as location. Moreover, by tracking drivers' performance behind the wheel, insurance providers can adopt usage-based insurance (UBI) program and consequently set premium costs for auto insurance customers. The rise of the global insurance telematics market can somehow be linked to the growing requirement for regulatory compliance and guidelines, decrease in the cost of connection solutions, and increased need for risk as well as assessment and management.

Market Dynamics

Market Driving Factors

Excellent Data + Device Management Provided by Insurance Telematics Cloud Deployment

Internet of Things (IoT) integration in passenger and commercial cars is driving cloud service adoption in insurance telematics. The cloud helps to access a wide range of information about a device while it is in motion. For example, a parent can keep an eye on their children's driving habits. With the help of third-party applications, cloud services may be integrated into the whole customer experience, driving the market's growth over the projection period.

To further the segment's growth, it allows for real-time data exchanges with the individual in question. This aids in keeping a record of the vehicle activities by incorporating cloud telematics, which provides insights and dangers linked with a driver's driving style. For one thing, cloud-based services are predicted to develop faster than on-premise services over the next few years because of lower data storage costs, which will help the segment's growth throughout the projection period.

Telematics Deployment in Vehicles Is Subject to Stringent Government Regulations

Automobile safety and security has become a top priority for governments in various countries throughout the world. Many governments have made it mandatory to increase the number of installations in order to track the position and movement of vehicles. Many countries have made services like theft surveillance and emergency alert systems required by law to have some level of availability. As per the Clause 35(2) under Section 2 of the Act, the Ministry as well as Road Transport Highway of the Central Government of India mandates that all public transportation include location monitoring devices, Global positioning system, plus emergency button like a safety precaution. It has been ordered by the European Commission, which is concerned about increasing road deaths and occupant safety, that e-Call systems be integrated.

Market Restraining Factors

Privacy Concerns and Lack of Awareness Among Customers

However, the global insurance telematics market's expansion is being slowed by a few obstacles. Concerns about data theft and lack of openness in data collecting methods are projected to slow down market expansion. ' Additionally, the lack of internet connectivity has an impact on real-time surveillance systems and reduces the customer's chances of receiving insurance company discounts. A lack of human integrity and a sophisticated design are also impeding the market's expansion. The insurance telematics and cloud and mobile technology security challenges provide a problem for the sector. Furthermore, the market's expansion is hampered by worries about individual and customer privacy.

Key Market Opportunities

Individualized, High-Value Services and A Burgeoning Automobile Industry

Telematics companies in growing economies like India, Singapore, Japan, China, & South Korea have tremendous opportunities to expand and strengthen their capabilities. Telematics in automobile insurance is expected to expand in popularity over the next few years because to its affordable policy rates and tailored and value-added services, which can successfully satisfy consumer needs.

The absence of monetary resources in these nations has led to a need for cost-effective measures, which is expected to provide profitable opportunities for market advancement. Telematics providers are finding new ways to improve customer experiences, better collaborations with partners, and monetize data as a result of the increasing innovation in the automobile industry, which is expected to open market opportunities in the future years.

Regional Analysis

The Global Insurance Telematics Market is segmented by geography into North America, Europe, Asia-Pacific (APAC), Latin America, and Middle East & Africa (MEA).

In the year 2021, the North American section was the most dominant player in the market, and this is likely to endure during the projection period as well. This pre-eminence can be due to the existence of key companies, developments in technology, and a significant increasing desire for interconnected services. The insurance companies in North America have sped up their adoption of cloud solutions and have begun moving their apps and data to a network that is hosted in the cloud.

Insurance companies are beginning to adopt the cloud network in order to separate themselves from other businesses in their industry and to have access to cutting-edge technology. This allows the organisations to keep a high level of competitive advantage. For instance, the cloud-based solutions offered by Accenture provide telematics services that are both reliable and affordable by adjusting to the insurance cloud programs that they offer.

It is anticipated that Asia Pacific will emerge as the region with the highest growth rate, driven by Japan and China. These markets are seeing a significant rise in the deployment of telematics and Internet of Things technologies, both of which are dependent on mobile devices owned by third parties. In addition, the Asia-Pacific industry is still in its infant phases due to the presence of persistent difficulties, such as inadequate data protection and a general lack of understanding on the part of customers.

However, the extensive implementation of mobile phone technology and innovative mobile connectivity is likely to propel the growth of the UBI model. In addition, the expanding investments plus partnerships will help in supporting the market's expansion in the next years.

Segmental Analysis

The Global Insurance Telematics Market is divided into different segments according to the Offering, Type, Deployment, Enterprise Size, End Use, and Region (Geography).

By Offering, the Global Market is segmented into Hardware and Software. In recent years, software has held a substantial market share. With ever-increasing network capacity and connectivity demands, the software sector is becoming more and more important commercially. Informatics and telecommunications are combined in telematics software, which is referred to as telematics software.

Over the projection period, hardware is likely to grow at a significant rate. UBI and automotive IoT rely heavily on mobile devices as well as machine-to-machine (M2M) communication. A cost-effective way to delivering insurance telematics plus in-vehicle services can be achieved by OEMs with Telematics Service Providers (TSPs).

By Type, the Global Market is segmented into Pay-as-you-drive, Pay-how-you-drive, and Pay-as-you-go. In 2021, the insurance telematics market was dominated by pay-as-you-drive (PAYD). All around the world, the business value of UBI is increasing due to its widespread implementation. Significant results have been generated under this model by custom features such as the payment of insurance premiums based on driving behavior and the degree of exposure.

During the projection period, PHYD is expected to increase at the fastest rate. Called as black box insurance, PAYD has many of the same qualities as this type of insurance. The PHYD model also achieves great accuracy in premium price and allows drivers to regulate the expense of their premium through incentive schemes.

By Deployment, the Global Market is segmented into On-premise and Cloud. In 2021, the on-premise category led the market and is projected to develop steadily during the forecast period. On-premise implementation is likely to be sufficient for connectivity criteria including software upgrade as well as turnaround time as the network of interconnected automobiles grows in the near future. Because of this, on-premise service plus deployment will remain dominant in the telematics sector for the foreseeable future.

Due to the increasing use of cloud platforms and new approaches in the industry, cloud deployment is becoming more commonplace. To provide UBI services, several major businesses are focusing on cloud platforms. Data analytics & telematics provider Octo Telematics makes use of Cloudera Enterprise to deliver insights into insurers for the assessment of driving risk, claim services, as well as customer relationship management.

By Enterprise Size, the Global Market is segmented into Large Enterprises and Small & Medium Enterprises. In 2021, the market was dominated by large organizations, and this dominance is likely to continue during the forecast period. The growing use of mobile telematic systems in automobile insurance has had a significant impact on the industry.

The future is anticipated to be optimistic for small and medium-sized businesses, which are predicted to develop rapidly. Small and medium-sized businesses rely heavily on customer retention and cost-effective claims services as growth drivers. App-based virtual services are also being offered by small and medium-sized businesses. There has also been a lot of attention paid to entrepreneurs in emerging nations that deal with mobile technology and telematics.

By End Use, the Global Market is segmented into Passenger Vehicle and Commercial Vehicle. In 2021, the market was dominated by the passenger car category. A linked digital supply chain in the telematics business is being used to manage a fleet of insured vehicles. As a result, fleet management procedures for passenger vehicles are projected to benefit greatly in the near future. A claim transaction in a UBI service system can be completed via a custom-designed app for passenger automobiles.

Commercial fleets are projected to fuel the growth of the commercial vehicle market in the near future. In the business telematics market, major players are expected to drive growth. A good example is Octo Fleet, a business insurance telematics solution from Octo Telematics. It makes it possible for commercial vehicles to take advantage of an exclusive set of telematics services, thereby increasing their profitability.

By Region or Geography, the Global Market is segmented into North America, Europe, Asia-Pacific (APAC region), Latin America, and Middle East & Africa (MEA). In 2021, the North American area dominated the market, and this dominance is expected to continue for the foreseeable future. Key companies, technical advances, and a large market for interconnected services have all contributed to this domination. China and Japan are predicted to lead the way in Asia Pacific's growth, which is expected to outpace the rest of the world.

Impact of covid-19

The automotive industry is critical to the economy's growth. However, during the second and third quarters of 2020, the COVID-19 outbreak impacted the whole automotive supply chain, affecting new car sales in FY 2020.

South America is most affected by COVID-19, with Brazil leading the way, followed by Ecuador, Chile, Peru, and Argentina. South America's government (SAM) has taken a number of steps to protect its citizens and stem the spread of COVID-19. South America is expected to have fewer export revenues as commodity prices fall and export volumes fall, particularly to China, Europe, and the United States, which are all significant trading partners. The manufacturing industry, especially automotive manufacturing, has been damaged by containment measures in various South American countries. Due to the pandemic, major automotive manufacturers have also temporarily halted manufacturing in the region as a cost-cutting move. Furthermore, the automobile disc brake industry has been significantly affected in 2020 due to a lack of raw materials and supply chain disruption.

The Automotive Brake System control module of a vehicle is meant to alert the driver with a warning light if the system fails. The module itself is rarely defective; instead, the sensors or the wiring to the sensors are frequently defective. The most typical cause of dysfunction is when the Automotive Brake System is contaminated with particles or metal shavings. There is no signal continuity when sensor wiring is destroyed. Brake fluid becomes contaminated in corrosive situations, and the hydraulic unit fails to function.

Recent Developments

• April 2024 - Aviva started a new program to assist drivers in becoming more proficient drivers and possibly save money on their renewals. The new idea, called MyDrive, will use smartphone technology to track drivers' driving behaviors and offer recommendations to improve safety.
• February 2024 - In certain jurisdictions, High-Definition Vehicle Insurance (HDVI), a leader in technology-driven commercial auto insurance, introduced the next iteration of HDVI ShiftTM, the first usage-based, dynamically priced insurance option for fleets of commercial trucks, for policies that take effect on February 1st or later.