Automotive UBI (Usage-based Insurance) Market Size, Share, Growth, and Industry Analysis, By Types (Pay as You Drive (PAYD),Pay How You Drive (PHYD)), By Applications Covered (Personal,Business), Regional Insights and Forecast to 2033

Automotive UBI (Usage-based Insurance) Market Size

The global automotive usage-based insurance (UBI) market was valued at USD 3.00 billion in 2024 and is projected to reach USD 3.55 billion in 2025. Driven by advancements in telematics, increased focus on personalized insurance pricing, and consumer demand for cost-effective premiums, the market is expected to grow significantly, reaching USD 13.63 billion by 2033, exhibiting a robust compound annual growth rate (CAGR) of 18.3% during the forecast period [2025–2033]. UBI models—including pay-as-you-drive (PAYD), pay-how-you-drive (PHYD), and manage-how-you-drive (MHYD)—are revolutionizing traditional insurance by leveraging real-time data from connected vehicles, enabling dynamic pricing based on driving behavior, mileage, and risk levels. The growing adoption of IoT, GPS, and smartphone-based telematics platforms is fueling this global shift.

In 2024, the United States had approximately 19.8 million active UBI policyholders, representing about 34% of global subscribers. Among them, over 11 million drivers were enrolled in pay-how-you-drive programs, with significant adoption in states like California, Texas, and Florida—regions known for high urban density and competitive insurance markets. Additionally, more than 75% of U.S. UBI users accessed telematics platforms through mobile apps integrated with real-time feedback, driving scores, and incentives for safe driving behavior. Insurance providers such as Progressive, Allstate, and State Farm led the U.S. market in UBI offerings, supported by partnerships with automakers and third-party telematics providers. Growing consumer interest in personalized premiums and road safety continues to position the U.S. as a major contributor to the global expansion of usage-based auto insurance.

Key Findings

• Market Size - Valued at 3.55 billion in 2025, expected to reach 13.63 billion by 2033, growing at a CAGR of 18.3%.
• Growth Drivers - 82% rise in connected vehicles, 67% U.S. telematics integration, 51% user discounts, 40% OEM-insurer partnerships
• Trends - 57% PAYD adoption, 43% PHYD adoption, 91% mobile-only UBI accuracy, 34% gamified insurance features
• Key Players - Allstate Insurance, GEICO, Progressive Corporation, AXA, Root Insurance
• Regional Insights - North America 38%, Europe 27%, Asia-Pacific 24%, Middle East & Africa 11% – driven by regulation, digital access, and OEM alliances
• Challenges - 46% data privacy concerns, 33% telematics gaps, 31% standardization issues, 29% device compatibility limitations
• Industry Impact - 26% claims reduction, 19% user retention boost, 34% fleet policy optimization, 15% fraud detection improvement
• Recent Developments - 19% AI-based pricing pilots, 15% policy expansion, 34% gamification, 29% EV-focused plans, 23% mobile-only deployments

The Automotive UBI (Usage-based Insurance) Market is transforming the traditional auto insurance landscape by aligning premiums with individual driving behavior and mileage. With advancements in telematics and real-time data analytics, insurers are offering customized pricing models that reward safe and infrequent drivers. In 2024, over 22% of auto insurance policies in developed regions were usage-based, reflecting strong consumer interest in fairness and cost efficiency. The Automotive UBI (Usage-based Insurance) Market is experiencing growth due to rising vehicle connectivity, insurer competition, and demand for personalized policies. This trend is further strengthened by regulatory support for data transparency and digital insurance.

Automotive UBI (Usage-based Insurance) Market Trends

The Automotive UBI (Usage-based Insurance) Market is witnessing accelerated adoption driven by digital transformation and changing consumer expectations. In 2024, telematics devices were installed in over 64 million insured vehicles globally, highlighting a dramatic shift toward data-driven insurance policies. The rise of embedded telematics in connected vehicles is fueling this growth. Original Equipment Manufacturers (OEMs) are partnering with insurers to deliver factory-installed UBI solutions, with nearly 40% of new car models supporting UBI-ready platforms.

Insurance providers are increasingly using real-time data to assess driving patterns, including speed, acceleration, braking, and time of use. Over 51% of UBI users in 2024 received policy discounts for safe driving behaviors. Mobile-based UBI platforms are becoming dominant, particularly in North America and Europe, where smartphone penetration exceeds 85%. The trend is expanding into developing regions with affordable mobile telematics apps replacing costly black-box installations.

In addition, the Automotive UBI (Usage-based Insurance) Market is seeing diversification into new models like Pay as You Drive (PAYD) and Pay How You Drive (PHYD). These models offer flexibility for different driving habits. In 2024, PAYD accounted for 57% of all UBI policies issued, while PHYD is growing rapidly among younger drivers. Sustainability initiatives are also influencing the Automotive UBI (Usage-based Insurance) Market, as lower-mileage policies align with emissions reduction goals.

Automotive UBI (Usage-based Insurance) Market Dynamics

The Automotive UBI (Usage-based Insurance) Market is shaped by several interdependent factors, including regulatory support, technological innovation, and evolving consumer preferences. Governments are encouraging digital insurance frameworks and fair premium structures, driving wider adoption of usage-based models. Insurers are leveraging AI and machine learning to improve risk assessment, fraud detection, and policy customization in the Automotive UBI (Usage-based Insurance) Market.

Connectivity in modern vehicles plays a pivotal role, enabling real-time data transmission for policy evaluation and rewards. As the automotive industry moves toward autonomy and electrification, insurers are adjusting UBI models to cover new risk profiles. Additionally, partnerships between automakers, telecom providers, and insurance companies are redefining distribution and data ownership in the Automotive UBI (Usage-based Insurance) Market. These developments are collectively fostering market resilience and evolution.

OPPORTUNITY

Expansion in Emerging Markets

Emerging markets present a vast opportunity for the Automotive UBI (Usage-based Insurance) Market, as digital transformation in insurance gains momentum. Countries in Asia-Pacific, Latin America, and Africa are increasingly adopting mobile-first insurance solutions due to widespread smartphone use. In 2024, mobile-based UBI pilot programs were launched in India, Brazil, and South Africa, with user growth exceeding 23% in the first six months. Lower vehicle density and higher accident rates in these regions are pushing insurers to adopt usage-based models to differentiate offerings and control claim costs. Government support for digital insurance infrastructure and regulatory sandboxes is also attracting InsurTech startups. The untapped potential in rural and semi-urban areas provides room for scalable UBI deployment, making emerging markets a key area of focus for insurers.

DRIVERS

Rise in Connected Vehicle Adoption

The growing number of connected vehicles is a major driver of the Automotive UBI (Usage-based Insurance) Market. In 2024, over 82 million vehicles globally were connected to telematics platforms, enabling real-time monitoring of driver behavior. This connectivity allows insurers to offer personalized insurance plans, which can lead to savings of 10% to 30% for policyholders exhibiting safe driving habits. In the U.S., 67% of new cars sold were embedded with UBI-compatible systems. OEMs like Ford, GM, and Toyota are integrating telematics modules in production lines to support insurance-based services. This expansion of embedded vehicle technology is boosting UBI adoption significantly.

RESTRAINT

"Privacy and Data Security Concerns"

One of the primary restraints in the Automotive UBI (Usage-based Insurance) Market is growing concern over personal data privacy. In 2024, nearly 46% of potential UBI customers expressed reluctance to share their driving data due to fear of misuse. Instances of telematics data breaches have raised questions about storage, ownership, and third-party access. Regulatory discrepancies between regions further complicate compliance for global insurers. Moreover, certain users are wary of continuous monitoring and fear penalization for minor infractions. These privacy concerns are slowing down mass adoption and present a challenge for building consumer trust in UBI programs.

CHALLENGE

"Standardization and Infrastructure Gaps"

The Automotive UBI (Usage-based Insurance) Market faces challenges related to lack of standardization and uneven infrastructure development. In 2024, over 33% of insurers operating in developing regions cited difficulty in accessing consistent vehicle telematics data. Many vehicles, especially older models, lack compatibility with UBI platforms, requiring retrofit devices that increase costs and operational complexity.

Infrastructural barriers such as poor cellular coverage and inconsistent GPS accuracy hinder real-time data capture and analysis. Additionally, the absence of global standards for data collection, transmission, and storage creates integration issues across multinational platforms. These gaps limit the scalability of UBI services and increase the burden on insurers to maintain diverse tech ecosystems.

Segmentation Analysis

The Automotive UBI (Usage-based Insurance) Market is segmented based on type and application, with each segment catering to unique user needs and operational models. By type, the market includes Pay as You Drive (PAYD) and Pay How You Drive (PHYD). PAYD models offer mileage-based premiums, while PHYD models assess driver behavior for risk-based pricing. Both models are widely adopted depending on driving frequency and region.

In terms of application, the Automotive UBI (Usage-based Insurance) Market serves both personal and business users. Personal users benefit from affordable premiums and driving feedback, while business users use UBI to monitor fleet performance and manage insurance costs. This segmentation reflects the market's adaptability to diverse user categories and its role in transforming traditional insurance frameworks.

By Type

• Pay as You Drive (PAYD): Pay as You Drive (PAYD) is a widely adopted model in the Automotive UBI (Usage-based Insurance) Market. In 2024, PAYD accounted for 57% of UBI policies globally, driven by consumer demand for fair, mileage-based insurance premiums. This model is particularly popular among low-mileage drivers, such as retirees and remote workers. Insurers use odometer readings or GPS data to track usage and calculate premiums accordingly. In the U.K., PAYD adoption grew by 21% year-over-year, driven by younger drivers seeking flexible and cost-effective insurance options. PAYD models are being integrated into insurance apps for real-time mileage tracking, enhancing user experience and engagement.
• Pay How You Drive (PHYD): Pay How You Drive (PHYD) is rapidly gaining popularity in the Automotive UBI (Usage-based Insurance) Market due to its ability to reward safe driving behavior. PHYD models use telematics data to analyze factors such as speed, braking, acceleration, and time of travel. In 2024, PHYD policies represented 43% of UBI subscriptions globally, with high adoption among urban drivers and fleets. The model promotes road safety by providing driving feedback and incentivizing cautious driving. In the U.S., insurers offering PHYD policies reported a 26% reduction in claims frequency. This behavior-based pricing is becoming a key differentiator in competitive insurance markets.

By Application

• Personal: The personal application segment dominates the Automotive UBI (Usage-based Insurance) Market, accounting for over 74% of policyholders in 2024. Individual drivers prefer UBI plans due to their affordability and transparency. Consumers are attracted to features like real-time feedback, reward points for good driving, and app-based tracking. Insurers have reported a 19% increase in customer retention for UBI plans versus traditional models. Millennials and Gen Z drivers form a significant user base for personal UBI policies due to their digital-savvy nature and cost sensitivity. This segment continues to grow as awareness of personalized insurance spreads across developed and developing regions.
• Business: The business segment of the Automotive UBI (Usage-based Insurance) Market is expanding, particularly in logistics, ride-sharing, and rental services. In 2024, business users made up 26% of UBI policyholders globally. Fleet managers are adopting UBI to monitor driver behavior, reduce operational risks, and lower insurance expenses. Data from commercial telematics is used to assess fleet-wide performance, optimize routes, and minimize downtime. In markets like North America and Western Europe, insurers are offering tailored packages for commercial users with tools for driver scoring and incident reporting. The increasing focus on fleet safety and accountability is driving UBI growth in the business sector.

Automotive UBI (Usage-based Insurance) Market Regional Outlook

The Automotive UBI (Usage-based Insurance) Market demonstrates regional variations shaped by insurance regulations, consumer preferences, and technological adoption. North America leads in mobile telematics integration, while Europe emphasizes road safety compliance through behavior-based models. Asia-Pacific is rapidly scaling with mobile-first UBI platforms and insurance innovations, particularly in countries like India and China. The Middle East & Africa is showing traction with pilot UBI programs and commercial fleet applications. The regional segmentation offers a comprehensive view of growth opportunities and market maturity across various insurance ecosystems.

North America

In North America, the Automotive UBI (Usage-based Insurance) Market remains at the forefront, with 38% of all global UBI policies issued in the U.S. alone in 2024. Canada follows with strong adoption in metropolitan areas like Ontario and British Columbia. Over 70% of insurers offer UBI-based products, often bundled with digital apps and incentives. Telematics integration in newly sold vehicles reached 64% in 2024, driven by OEM-insurer collaborations. Consumer awareness of cost-saving plans and increased safe-driving initiatives have helped solidify UBI as a mainstream insurance choice.

Europe

Europe is a highly developed region for the Automotive UBI (Usage-based Insurance) Market, accounting for 27% of global UBI policyholders in 2024. Countries like Germany, the U.K., France, and Italy lead adoption through strong regulatory frameworks that encourage road safety and telematics usage. Insurers are required to provide data access transparency under GDPR, improving consumer trust in UBI models. In the U.K., over 45% of insurers actively promote PAYD and PHYD options. Usage-based premiums are popular among younger and urban drivers who seek flexible pricing models.

Asia-Pacific

Asia-Pacific is the fastest-growing region in the Automotive UBI (Usage-based Insurance) Market, holding 24% of global market share in 2024. China leads with more than 18 million UBI-enabled vehicles, followed by Japan, South Korea, and India. Government initiatives to digitize insurance and promote safe driving are accelerating adoption. In India, UBI pilots recorded a 23% reduction in claim rates among policyholders. Telematics-based pricing is being integrated with car loans and EV leasing models. Local startups and global insurers are competing in this mobile-driven insurance space.

Middle East & Africa

The Middle East & Africa represents 11% of the global Automotive UBI (Usage-based Insurance) Market share as of 2024. UAE and Saudi Arabia are pioneering regional adoption with regulatory sandboxes supporting digital insurance models. Pilot UBI programs in South Africa showed a 29% drop in traffic violations for enrolled users. Commercial vehicle fleets are a primary focus, with insurance providers offering driver-behavior monitoring tools. The region’s growing youth population, urbanization, and increased smartphone penetration are key enablers of UBI expansion.

List of Top Automotive UBI (Usage-based Insurance) Companies

Investment Analysis and Opportunities

The Automotive UBI (Usage-based Insurance) Market is attracting significant investment across developed and emerging economies. In 2024, more than 45 insurers worldwide expanded their UBI offerings through acquisitions or joint ventures. Venture capitalists have invested heavily in telematics startups building API-integrated platforms to support insurance analytics. In the U.S., $1.2 billion was invested in digital insurance models, with UBI accounting for nearly 40% of funding volume.

In Asia-Pacific, government-backed funds in India and China supported mobile UBI development, promoting collaboration between telecom providers and insurers. In Europe, cross-border initiatives supported by the European Insurance and Occupational Pensions Authority aim to standardize UBI data use. Automotive OEMs are also investing in in-house telematics that interface directly with insurance APIs.

Additionally, infrastructure companies are funding UBI-compatible IoT platforms for use in smart cities and EV charging stations. Commercial fleet owners are investing in enterprise UBI solutions to reduce liability and lower claim payouts. With data regulation tightening globally, investments in blockchain for secure UBI data sharing are gaining traction. Overall, these investment flows highlight the rising strategic importance of usage-based models in reshaping auto insurance.

New Products Development

Innovation in the Automotive UBI (Usage-based Insurance) Market is accelerating with launches focused on personalization, environmental impact, and multi-channel access. In 2024, Root Insurance launched an AI-powered dynamic UBI model that updates premiums monthly based on driver behavior and time-of-day trends. Progressive introduced a UBI solution for gig workers and part-time drivers, offering flexible mileage-based billing.

Allstate developed a family-driver UBI platform that scores each household member individually, with unique incentives for low-risk users. GEICO introduced a smartphone-only UBI app that bypasses the need for external devices while achieving 91% data accuracy. Bajaj Allianz in India released a PAYD plan bundled with vehicle diagnostics and carbon-emission tracking features.

European players like AXA and Unipol have launched PHYD models integrated into EV subscription plans. UBI-linked gamification models, where users earn points or cashback for safe driving, were adopted by 34% of insurers in 2024. Many insurers have begun integrating voice assistant capabilities into UBI dashboards to enhance user interaction. These developments are not only making insurance more interactive but also improving policyholder engagement and safety outcomes.

Recent Developments

• In 2023, Progressive expanded its Snapshot UBI program to 11 new states in the U.S., increasing customer acquisition by 15%.
• In 2023, GEICO launched DriveEasy Pro, a telematics app used by 2 million policyholders within 6 months.
• In 2024, Root Insurance piloted AI-based pricing models in urban U.S. markets, with early tests showing a 19% retention boost.
• In 2024, AXA rolled out a PAYD product tailored for EV users in France and Germany, enrolling over 300,000 customers.
• In 2024, State Farm partnered with OEMs to embed UBI scoring in 5 new vehicle models sold in North America.

Report Coverage

This report provides a thorough analysis of the Automotive UBI (Usage-based Insurance) Market, including key insights on market segmentation, regional dynamics, leading players, technological advancements, and investment trends. It covers both PAYD and PHYD models and outlines their impact on personal and commercial insurance sectors. The report also evaluates mobile and embedded UBI solutions, regulatory frameworks, and data privacy challenges.

Included are detailed profiles of 16 top market players, innovation trends, and case studies from global and regional insurers. It captures new product developments and strategic partnerships between insurers, OEMs, and tech providers. Market size estimates, adoption rates, and regional shares are presented with factual clarity.

Stakeholders such as insurers, investors, automakers, and digital platform developers can leverage this report for strategic decision-making, technology investment, and consumer engagement. The Automotive UBI (Usage-based Insurance) Market continues to redefine automotive insurance, promoting data-driven, fair, and sustainable risk management practices.