LONDON--(BUSINESS WIRE)--Technavio analysts forecast the global automotive usage-based insurance (UBI) market to grow at a CAGR of almost 8% during the forecast period, according to their latest report.
The research study covers the present scenario and growth prospects of the global automotive UBI market for 2017-2021. To calculate the market size, the report considers the unit shipment of UBI systems in the automotive segment across all regions.
UBI technology uses embedded devices or smartphones to draw data regarding driver behavior and send it to insurers for optimum premium calculation. UBI gives control of premium pricing to the driver instead of insurers, and this makes the solution unique in the insurance market. The UBI system gives the added benefits of both insurer and driver in the form of pricing. For instance, effective UBI solution has potential to reduce claim costs by 40% and administration cost by half.
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Technavio automotive analysts highlight the following four factors that are contributing to the growth of the global automotive UBI market:
- Government initiatives encouraging use of telematics
- Regulations for motor insurance
- Growing smartphone usage
- Growing demand for embedded telematics solutions
Government initiatives encouraging use of telematics
Passenger vehicles are the largest users of telematics systems worldwide due to the increased demand for vehicle tracking and navigation services in passenger vehicles. Among the services offered by telematics solutions for passenger vehicles, e-Call and stolen vehicle tracking have been the key areas of focus for many regulatory bodies across the world.
Siddharth Jaiswal, a lead automotive manufacturing analyst at Technavio, says, “Developing countries like India and China are already into the development of regional navigation systems to support telematics service providers and reduce dependency on the US navigation system GPS. This step will lead to a reduction in the cost of telematics devices in these countries.”
Regulations for motor insurance
Regulations play a critical part in the adoption of insurance in the automotive segment. Most countries in the world mandate motor insurance. It will be beneficial for drivers to adopt UBI due to advantages such as reduced premium cost and enhanced safety through the monitoring of driving behavior. The rising share of digital distributors of motor insurance sales is also a positive trend in the automotive UBI market.
“In 2015, digital distributors accounted for about 11% of the share of motor insurance, and this is expected to increase significantly during the forecast period, as there has been approximately 40% increase in the sales after serving through a digital platform,” adds Siddharth.
Growing smartphone usage
The demand for in-vehicle connectivity and telematics has led to technological improvements, which aim at enhancing the overall in-vehicle experience of both the passengers and drivers. As consumers increase their interaction with their personal mobile devices, they expected the same experience from their in-vehicle entertainment and information systems, with respect to user interface and information collection.
Growing demand for embedded telematics solutions
The automotive telematics and infotainment markets are expanding at a fast pace in the emerging markets, especially in the BRIC countries. With rising interest for navigation services and infotainment services among consumers, OEMs, in collaboration with automotive connectivity solution providers, are planning to introduce new products and services to seize the opportunities in these countries efficiently.
- Intelligent Mechatronic System
- Octo Telematics
- Sierra Wireless
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Technavio is a leading global technology research and advisory company. The company develops over 2000 pieces of research every year, covering more than 500 technologies across 80 countries. Technavio has about 300 analysts globally who specialize in customized consulting and business research assignments across the latest leading edge technologies.
Technavio analysts employ primary as well as secondary research techniques to ascertain the size and vendor landscape in a range of markets. Analysts obtain information using a combination of bottom-up and top-down approaches, besides using in-house market modeling tools and proprietary databases. They corroborate this data with the data obtained from various market participants and stakeholders across the value chain, including vendors, service providers, distributors, re-sellers, and end-users.
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