Usage-based Insurance UBI Market Size & Outlook, 2026-2034

Usage-based Insurance UBI Market Overview

The global usage-based insurance (UBI) market size is valued at USD 33.47 billion in 2025 and is estimated to reach USD 122.33 billion by 2034, growing at a CAGR of 15.9% during the forecast period. Consistent growth of the market is supported by the rising adoption of vehicle telematics, real-time driving behavior analytics, and personalized premium models, which enable insurers to offer fairer pricing, enhance risk assessment accuracy, and encourage safer driving habits among policyholders.

Key Market Trends & Insights

• North America dominated the market with a revenue share of 35.21% in 2025.
• Asia Pacific is anticipated to grow at the fastest CAGR of 17.45% during the forecast period.
• Based on policy type, the Pay-As-You-Drive (PAYD) segment held the highest market share of 38.64% in 2025.
• By technology type, the Embedded Telematics Systems segment is estimated to register the fastest CAGR growth of 16.82%.
• Based on vehicle type, the Passenger Cars segment dominated the market in 2025, accounting for a market share of 37.38%.
• By application, the Individual Vehicle Insurance segment is projected to grow at a CAGR of 15.42% during the forecast period.
• The U.S. dominates the Usage-Based Insurance (UBI) Market, valued at USD 11.76 billion in 2024 and projected to reach USD 13.05 billion in 2025.

Table: U.S Usage-based Insurance UBI Market Size (USD Million)

Source: Straits Research

Market Size & Forecast

• 2025 Market Size: USD 33.47 billion
• 2034 Projected Market Size: USD 122.33 billion
• CAGR (2026-2034): 15.9%
• Dominating Region: North America
• Fastest-Growing Region: Asia Pacific

The global Usage-Based Insurance Market comprises a wide range of telematics-based insurance models, such as Pay-As-You-Drive, Pay-How-You-Drive, Manage-How-You-Drive, Pay-As-You-Go, and Distance-Based Insurance empowered by advanced OBD-II devices, embedded telematics systems, smartphone-based platforms, black-box units, and hybrid data models recording and analyzing driver behavior in real time. Moreover, UBI solutions are implemented on passenger cars, LCVs, and HCVs for better risk assessment and price accuracy. Applications include individual vehicle insurance, commercial fleet programs, shared mobility platforms, pay-per-mile leasing models, and OEM-integrated insurance offers to help insurers and automakers offer personalized, data-driven coverage while improving safety, transparency, and efficiency within the automotive insurance markets worldwide.

Latest Market Trends

Transitioning to Real-Time, Behavior-Based Insurance from Traditional Premium Models

The automotive insurance ecosystem is in a state of transformative change from the static, one-size-fits-all premium model to a dynamic, behavior-based pricing-powered-by-telematics model. Earlier, insurers relied heavily on demographic and vehicle-related factors such as age, car model, and location for determining premiums, which often resulted in generalized assessment of risk and limited personalization.

Today, UBI solutions powered by telematics, IoT, and AI analytics provide for continuous monitoring of driving behavior, speed, acceleration, and braking patterns in real time for the calculation of risk. This evolution helps reward safe drivers with reduced premiums and also provides instantaneous feedback to improve road safety. Leading insurers are in the process of developing in-app dashboards encouraging cautious driving through gamified experiences, reflecting a deeper integration of behavioral economics into insurance design.

Integration of Telematics Ecosystems with Automotive OEMs

The increasing collaboration of insurers and vehicle manufacturers to embed telematics systems directly into the vehicles is a key trend reshaping the UBI landscape. Today, automakers integrate sensors and connectivity modules within the vehicle, transmitting driving data seamlessly to the partnered insurers. Therefore, external devices such as OBD plugs or mobile tracking apps are not required, enhancing accuracy and user convenience. Such collaborations between OEMs and insurers redefine the way insurance is bundled at the point of vehicle purchase-data-driven coverage becomes a built-in ownership benefit. Faster claims settlements, predictive maintenance notifications, and proactive risk mitigation become seamless, setting a new benchmark in customer experience for auto insurance.

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Market Driver

Government initiatives on connected vehicle ecosystems and telematics mandates

Governments around the world, both at international and national levels, are accelerating the integration of connected vehicle infrastructure, thus laying the foundation for large-scale UBI adoption. In fact, regulatory bodies in the United States, Germany, India, and Japan have rolled out telematics-driven road safety programs that require vehicles to be equipped with data-recording systems.

For instance, the Indian government's Automotive Industry Standard, AIS-140, makes GPS tracking and emergency systems compulsory for all commercial fleets, thus granting insurers an opportunity to offer customized policy coverage by analyzing real-time driving data. Similarly, Europe's eCall and North America's Vehicle Safety Data Act facilitate connected intelligence within automobiles, thereby creating a better environment for usage-based premium models. This policy-driven growth of telematics ecosystems is a strong force driving up both growth and credibility for the UBI market.

Market Restraint

Regulatory Uncertainty and Fragmented Data Governance Across Regions

The inconsistent regulatory framework and fragmented data governance laws across different countries are a significant restraint to the usage-based insurance market. While most governments encourage the adoption of telematics in the name of improving vehicle safety, few have issued uniform legal standards that would govern the collection, storage, and sharing of driver behavior data. European nations place strict data protection regulations under the General Data Protection Regulation on how insurers should process telematics data without explicit consent, while emerging markets such as India and Brazil are still working on formal telematics data privacy guidelines. The absence of harmonization makes the rollout of international policies complex and inhibits cross-border insurance innovation, further limiting the global scalability of UBI programs.

Market Opportunity

Pay-Per-Mile and Short-Term Insurance Models to Expand for Urban Mobility

The acceleration towards urban mobility, car-sharing, and flexible vehicle ownership is driving new paths for the expansion of the UBI market. For metropolitan area consumers, there is a growing preference for short-term or trip-based coverage over long-term policies, wherein direct linking of insurance costs occurs with actual vehicle usages. This evolution gives rise to pay-per-mile insurance programs that can be targeted at infrequent drivers, ride-hailing users, and subscription-based vehicle owners.

Insurance companies that introduce modular and on-demand coverage plans are able to capture a rapidly increasing share of this customer segment, which seeks affordability and convenience. As the urban transportation patterns evolve toward micro-mobility and shared assets, this adaptive model of insurance is emerging as a major lever of growth for the global UBI market.

Regional Analysis

North America dominated the market in 2025, accounting for a 35.21% share of the market. This is powered by the early development of connected vehicle ecosystems, highly developed insurance infrastructure, and a strong consumer preference for personalized premium models. Major insurers in this region have integrated telematics into their core product offerings, which further encourages widespread participation in pay-per-mile and behavior-based insurance programs. Strong digital ecosystems, seamless data integration between insurers and automakers, and high smartphone penetration have together catalyzed mainstream acceptance of UBI policies in North American markets.

Growth in the U.S. Usage-Based Insurance market is highly influenced by increasing partnerships between insurers and automakers for building inbuilt insurance models. Major car manufacturers are embedding usage-based coverage at the point of vehicle purchase, thereby increasing policy accessibility and improving customer convenience. In addition, driving engagement platforms are being introduced by insurers, including performance-based discounts and safety rewards to increase brand loyalty. The growing inclination of consumers toward transparency in premium calculation and flexible short-term coverages is driving steady market growth in the U.S., making it a global benchmark in the adoption of UBI.

Asia Pacific Usage-Based Insurance Market Insights

The Asia Pacific will emerge as the fastest-growing region, projected to record a CAGR of 17.45% from 2026-2034, driven by rapid digitalization of mobility ecosystems and growing middle-class vehicle ownership. Increased integration of smartphone-based UBI platforms and aftermarket telematics solutions for individual and commercial users is being observed in countries such as China, India, Japan, and South Korea. Insurers operating in these markets are increasingly offering gamified safe-driving apps and reward-based premium systems that appeal to the young, digitally active consumer base. The rising awareness about road safety, growing preference for affordable pay-per-use models, and expanding connected vehicle infrastructure are collectively supporting the region's accelerating growth of UBI.

Backed by the rapid growth of low-cost telematics devices and participation from new-age digital insurers, India is a fast-growing market for Usage-Based Insurance. Start-ups and established providers are embedding UBI into subscription and leasing offers through collaborations with vehicle financing companies and mobility platforms. Further, domestic insurers have begun piloting micro-insurance offers specifically designed for two-wheelers and small commercial fleets in order to expand UBI access into semi-urban areas. Increased app-driven engagement and rewards for safe driving behavior are further solidifying India's position as one of the most promising Usage-Based Insurance expansion markets in Asia Pacific.

Source: Straits Research

Europe Market Insights

Europe is seeing steady growth in the UBI market, driven by the region's connected mobility infrastructure, strict vehicle safety regulations, and growing consumer demand for fair pricing of insurance. Large European insurers are integrating UBI into digital policy ecosystems that incentivize responsible driving and help customers toward their carbon-efficient goals by directly relating carbon efficiency to insurance benefits. Building penetration through the increased adoption of pay-per-mile and behavior-based policies across major countries such as the U.K., Germany, France, and Italy is on the rise. Additionally, collaborations between automotive OEMs and telematics providers have ensured seamless data exchange and real-time premium customization, thereby driving the wide adoption of policies across both personal and commercial vehicle segments.

The Usage-Based Insurance market is rapidly growing in Germany, with the country's robust automotive manufacturing base and a rising focus on intelligent mobility. German insurers are joining forces with leading automobile brands to embed telematics into next-generation vehicles, thus assuring real-time data transmission and AI-based risk assessment. Strong analytics infrastructure and high consumer acceptance of digital insurance platforms have provided a suitable ecosystem for PAYD and PHYD models in the country. Additionally, insurers foster eco-friendly and safe driving through incentive-based driver engagement programs, which clearly align with greater German environmental and road safety goals. The combination of automotive innovation, consumer trust, and digital transformation continues to position Germany as one of Europe's most mature and technologically advanced UBI markets.

Latin America Market Insights

The Latin America UBI market is now gaining momentum, with insurers rolling out flexible, low-cost insurance options tailored to emerging middle-class drivers and commercial fleets. Most of the major economies in the region-such as Brazil, Mexico, and Chile-see a rising tide of smartphone-based telematics programs making usage-based coverage more accessible to increasingly younger consumers. Regional insurers are integrating UBI with mobile payment platforms and digital claims systems to enhance convenience and reduce policy management friction. Growing collaboration between regional mobility startups and insurance providers is driving innovation that now allows real-time driver scoring and personalized pay-per-use models to better align with Latin America's changing mobility patterns.

Brazil's market is growing rapidly, with telematics-based vehicle cover gaining traction among private car owners and small fleet operators. Locally based insurers are launching digital-first platforms that offer immediate policy activation, driving analytics, and usage-linked premium discounts. The increasing proliferation of relatively affordable connected vehicle devices, together with high smartphone penetration, is democratizing participation to include mid-income consumers. Insurers are also integrating loyalty rewards and safe-driving gamification features in efforts to boost engagement and retention. This increasingly rapid digital adoption, combined with a greater movement toward app-based policy management, will position Brazil as a regional hotbed for innovative, data-driven UBI solutions.

Middle East and Africa Usage-Based Insurance Market Insights

The Middle East and Africa UBI market is growing steadily as connected vehicle adoption and digital transformation are ushering in changes in the regional insurance landscape. Insurance companies across the UAE, Saudi Arabia, and South Africa have launched telematics-enabled policies to ensure road safety and encourage responsible driving habits. These initiatives have been encouraged by rapid mobile connectivity and the integration of IoT-based fleet monitoring systems across the region. Greater awareness of usage-based pricing among individual and corporate drivers is driving demand for PAYD and PAYG insurance solutions, enabling insurers to minimize claim frequencies while optimizing profitability.

The Usage-Based Insurance market in Saudi Arabia is recording strong growth, driven by rapid digitalization of vehicle services and expansion of connected mobility infrastructure. Top-ranked insurers will increasingly partner with automotive dealers and telematics players for the integration of real-time driving data into policy pricing. Demand for flexible, short-term cover from young drivers and corporate fleets will drive the adoption of digital UBI programs. Introduction of innovative mobile apps with driver feedback, safety tips, and performance-based rewards increases customer engagement. Given Saudi Arabia's commitment towards full digital transformation and modernization of road safety, the country has emerged as one of the key growth centers for the Middle East and Africa UBI market.

Policy Type Insights

Pay-As-You-Drive (PAYD)led the market segment with 38.64% of the revenue share in 2025, driven by increasing consumer demand for mileage-based premium models that promise cost efficiency and fairness. Drivers with lower annual mileage or those who use vehicles infrequently find PAYD policies highly attractive as they align insurance expenses with actual vehicle usage. The rise in urban populations to adopt remote work and limited commuting patterns further strengthens demand for PAYD coverage across both developed and emerging markets.

The fastest growth rate is expected to be seen in the Pay-As-You-Go (PAYG) category, growing at a projected CAGR of 16.95% during the forecast period. In addition, this growth is driven by increased adoption of short-term and flexible insurance models catering to on-demand mobility, users of car-sharing services, and subscription-based ownership. As consumers (especially young drivers and fleet operators) are increasingly looking for convenience and control through modular policy structures, PAYG models are fast gaining preference among their end-users in the evolving digital insurance ecosystem.

By Procedure Market Share (%), 2025

Source: Straits Research

Technology Type Insights

The On-Board Diagnostics (OBD-II) Devices segment accounted for the largest market share of 34.57% in 2025, given its wider adoption by insurers in order to garner accurate driving data and calculate premiums according to the driver's risk profile. OBD-based systems are widely adopted because of their ease of installation, cost-effectiveness, and easy compatibility with existing vehicle models without factory-fitted connectivity.

The Embedded Telematics Systems segment is expected to experience the fastest growth, at a CAGR of 16.82% during the forecast period. This rapid growth can be attributed to the rising collaboration between car manufacturers and insurers to embed telematics hardware directly into vehicles. Factory-installed connectivity solutions not only offer real-time, high-accuracy data but also reduce hassle for the user by avoiding additional devices.

Vehicle Type Insights

Passenger Cars dominated the market in 2025 with a share of 37.38% due to fast integration of telematics systems into private vehicles, driven by increasing demand for personalized, behavior-based insurance models. The rising demand for fairer and more transparent premium structure would increasingly create insurers targeting owners of passenger cars with PAYD and PHYD programs.

The Light Commercial Vehicles segment is expected to grow the most during the forecast period. This growth can be attributed to the growth in fleet management and logistics industries that utilize UBI solutions in order to optimize their insurance based on actual usage. Due in part to the growth of e-commerce delivery fleets and shared transportation networks, the demand for real-time monitoring has increased, pushing insurers to develop specific commercial telematics programs for LCVs.

Application Insights

The Individual Vehicle Insurance segment is expected to grow at a CAGR of 15.42% during the forecast period, driven by rising consumer preference for personalized, usage-based coverage models. As more and more drivers demand greater transparency and fairness regarding premium pricing, individual users have started to increasingly adopt telematics-enabled policies where insurance costs are directly attached to driving behavior and mileage. Increasing smartphone connectivity, digital engagement through insurer apps, and incentives related to safe driving further drive the demand for individual UBI policies, thus making this segment a significant contributor toward the long-term growth of the market.

Competitive Landscape

The global UBI market is fairly fragmented with impetus from innovation and market expansion by established insurers, automotive OEMs, and telematics solution providers. A few big companies hold the largest market share, given the size of their customer base, modern telematics platforms, and strategic collaborations with leading automakers and mobility service providers.

The major market players include Progressive Corporation, State Farm Mutual Automobile Insurance Company, Allstate Corporation, and others. Most of these companies are strengthening their positions in the market by introducing real-time telematics data, AI-driven risk assessment tools, and dynamic pricing models. Strategic initiatives such as partnership expansions, enhancement of their digital platforms, and offering personalized pay-as-you-drive and pay-how-you-drive policies enable these players to enhance customer engagement and retention and thus solidify their foothold in the evolving global UBI landscape.

SBI General Insurance: An emerging market player

India-based insurer SBI General Insurance has positioned itself as a key innovator in the UBI landscape with its flexible, data-driven motor coverage solutions. It was distinctive in introducing personalized, mileage-linked motor insurance products for low-usage private car owners.

• In October 2025, SBI General Insurance introduced its "Pay-As-You-Drive" car insurance policy allowing customers to choose between kilometre-based coverage plans and pay premiums based on actual usage of the vehicle. It also offers carry-forward benefits of unused kilometres and easy digital renewal options for more user convenience and transparency.

Thus, SBI General Insurance began making waves in the global UBI market by leveraging dynamic policy structures and innovation in customer-centric service.

List of key players in Usage-based Insurance UBI Market

1. Progressive Corporation
2. State Farm Mutual Automobile Insurance Company
3. Allstate Corporation
4. Liberty Mutual Insurance
5. Allianz SE
6. AXA SA
7. Zurich Insurance Group
8. GEICO
9. The Hartford Financial Services Group
10. Farmers Insurance Group
11. MetLife Inc.
12. AIG
13. MAPFRE S.A.
14. Direct Line Group
15. Tokio Marine Holdings, Inc.
16. Aviva Plc
17. China Pacific Insurance Company
18. Munich Re Group
19. Sompo Holdings, Inc.
20. Admiral Group plc
21. Others

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Strategic Initiatives

• August 2025: Zopper (InsurTech) published a blog indicating that UBI products, including PAYD and PHYD models, would become “top-3 motor insurance purchases” in India by the end of 2025, reinforcing its positioning as a strategic priority for digital insurers.
• July 2025: IMS (Insurance Mobility Solutions) announced a major rollout of its unified Vehicle-Data-Exchange platform for UBI across North America, supporting over 12 million vehicles by year-end and enabling insurers to streamline telematics-data integration.
• March 2025: ITOCHU Corporation announced the formation of a dedicated “Financial & Mobility Innovation Division” to develop next-gen UBI products compatible with EVs and autonomous vehicles, using edge-computing and in-vehicle computer-vision platforms.
• February 2024: Bajaj General Insurance (India) publicly launched a new UBI-motor product targeted at low-mileage city commuters, offering a “Kilometer-Credit” plan for drivers logging fewer than 5,000 km annually aimed at urban households.