Usage-Based Insurance Market Analysis: Risk Assessment Models & Revenue Forecast

Advancements in telematics technology, growing consumer demand for personalized insurance models, and expanding integration of connected vehicle platforms are fueling the usage-based insurance market. According to IMARC Group's latest data, The global usage-based insurance market size was valued at USD 62.35 Billion in 2024. Looking forward, IMARC Group estimates the market to reach USD 355.45 Billion by 2033, exhibiting a CAGR of 20.27% from 2025-2033. North America currently dominates the market, holding a market share of 40.6% in 2024.

The usage-based insurance industry has experienced significant transformation as insurers move toward behavior-driven pricing models powered by real-time telematics data. Rather than relying solely on traditional demographic factors, UBI policies now track actual driving patterns—mileage, speed, braking habits, and time of day—to create fairer, more transparent premium structures. This shift is being embraced by consumers who want their insurance costs to reflect how they actually drive.

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Usage-Based Insurance Market Growth Drivers:

• Widespread Adoption of Telematics for Real-Time Driving Behavior Monitoring

Insurers are heavily investing in telematics infrastructure to collect real-time driving data acceleration patterns, braking intensity, speed fluctuations, cornering behavior, and trip distance. This technology enables precise risk profiling and personalized premium calculations that reflect actual usage rather than broad statistical assumptions. According to industry research, around 20 million of the 875 million active motor insurance policies globally were usage-based programs last year.

• Rising Focus on Road Safety and Accident Reduction Initiatives

Governments and insurance providers are turning to UBI as a practical tool to combat escalating road accident rates and improve driver accountability. With over 1.3 million annual road fatalities globally and 20 to 50 million non-fatal injuries disproportionately affecting low- and middle-income nations—there's urgent pressure to change driver behavior. New South Wales developed its 2026 Road Safety Action Plan through extensive community consultations, while the U.S. National Safety Council set an ambitious goal to eliminate highway deaths by 2050 through its Road to Zero initiative.

• Accelerated Integration of Advanced Digital Technologies and Connected Vehicles

The rapid evolution of smartphone telematics, embedded vehicle sensors, and AI-powered analytics is making UBI more accessible and cost-effective than ever. Smartphone-based solutions have eliminated the need for expensive plug-in devices, reducing barriers to entry for both insurers and policyholders. Citroen's partnership with ICICI Lombard showcased how mobile apps can track driving behavior without additional hardware. Meanwhile, Mastercard introduced UBI-linked payment cards in the U.S., unlocking over USD 60 billion in rewards for safe drivers.

Usage-Based Insurance Market Trends:

• Smartphone-Based Telematics Gaining Dominance Over Hardware Devices

The shift toward smartphone telematics is accelerating as insurers realize the cost savings and scalability benefits compared to OBD-II plug-in devices. Modern smartphones already contain the necessary sensors—GPS, accelerometer, gyroscope—to accurately measure driving behavior, eliminating installation requirements and hardware expenses. According to recent market analysis, over 50% of drivers under 35 would switch carriers to access UBI programs, and smartphone apps make enrollment frictionless.

• Strategic Partnerships Between Automakers and Insurance Providers

Automakers are no longer just vehicle manufacturers—they're becoming insurance ecosystem players by embedding telematics directly into new cars and forming strategic alliances with carriers. BMW, Tesla, and other premium brands are launching in-house UBI programs, using proprietary vehicle data to calculate premiums and create new revenue streams. Kia's partnership with LexisNexis in July 2025 brought driving behavior analytics to 28 European countries, enabling personalized insurance through integrated mobile apps.

• AI-Powered Risk Assessment and Predictive Analytics

Artificial intelligence and machine learning are revolutionizing how insurers process telematics data and predict risk. Rather than simple mileage tracking, modern UBI platforms analyze complex behavior patterns—recognizing dangerous habits like harsh acceleration, frequent late-night driving, or distracted phone use—to build comprehensive risk profiles. In January 2025, Qantev and InsureMO announced a global partnership combining AI-driven claims optimization with insurance middleware, serving over 300 carriers worldwide.

Recent News and Developments in Usage-Based Insurance Market

• June 2025: Zuno General Insurance launched India's first crash detection-enabled car insurance through its Zuno Smart Drive app, using mobile telematics to offer real-time crash alerts, instant roadside assistance, and faster claims processing without requiring additional devices or setup.
• May 2025: If P&C Insurance launched an embedded car-sharing insurance product on Socotra's cloud-native platform, self-implementing the solution in just five months to enable usage-based, on-demand coverage and enhance their presence in the sharing economy through open APIs and configurable policy infrastructure.
• February 2025: Allianz Partners and Cosmo Connected introduced a USD 10.40 per month micromobility insurance plan embedded within the Cosmo Fusion helmet, demonstrating the expansion of UBI concepts beyond traditional automotive insurance into emerging urban transportation segments.

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