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Customer LoginsUsage-Based Insurance (UBI) expected to grow to 142M subscribers globally by 2023
Usage based auto insurance (UBI) is a growing segment of the automotive insurance market, the result of a technological revolution as the Internet of Things (IoT) continues to further influence various industries, including automotive.
The current UBI landscape is in transition with robust expansion. New insurers are entering the market, new markets are being opened, and new solutions are being launched.
However, providers are still identifying and developing the strongest business models, the best value proposition, and the most suitable data capture device as it seeks to alleviate divergence with the auto industry. The added challenge of constantly evolving technology, including telematics, the connected car, and mobility itself are influencing factors.
Current Regional Leaders, Markets to Watch
In 2015, close to 12 million consumers globally subscribed to this type of insurance and this number is expected to grow to 142 million globally by 2023, according to the new IHS Usage Based Insurance (UBI) - 2016 report.
Due to the market potential in the U.S., IHS Automotive forecasts that it will be leading the way in UBI marketing and innovation in the coming years. It is the largest car insurance market in the world, with more than 260 million vehicles in operation in 2015. According to IHS estimates, there were more than 5 million UBI policyholders in 2015 in the U.S., by far the most of any other country.
Italy was a distant second, with just 3.6 million subscribers out of 36.8 million vehicles in operation in 2015. Italy is the only country today in which UBI has a double digit share of the insurance market, representing 10% of the market there in 2015, according to the IHS Automotive report. Government intervention was a strong influencer there. In 2012, in response to fraudulent insurance claims, the Italian Prime Minister instituted a decree that stipulated that if an insurance company already offered a UBI product with a "black box," it must offer the box to the customer at no charge and offer a significant upfront premium discount for consumers. Italy and the United Kingdom are by far the most mature UBI markets in Europe.
Another key market to watch is China. The Chinese government began granting foreign insurance carriers access to the market in 2012, and approximately 15 insurers will launch UBI pilot programs this year. The sheer size of the automotive market allows for the UBI subscriber volumes to grow from 50,000 in 2015 to over 22 million by 2023, according to IHS Automotive forecasts.
As UBI evolves, the technology that created it is also evolving-and, as a result, so is society. A smartphone-only solution will eventually dominate the global UBI market, but likely only for a short time.
The connected car is well on its way, and the vehicle itself may well be the ultimate UBI device. By the time connected cars are common on the world's roads, it could also be that, because of product innovation and the rise of alternative mobility models such as ride sharing and car leasing, the UBI market will not be anything like that of today.
Stacey Oh is Manager, Automotive Technology, IHS Automotive
Posted 9 May 2016