Telematics insurance is a solution used by motor insurance companies to track the real-time driving behavior of drivers and accordingly decide their policy premiums. It works by setting up a device, known as a Black Box, in the vehicle, which monitors & stores its different parameters like speed, braking pattern, driving style, distance, and the type of road one travels. Telematics insurance has immense potential to transform the current situation of motor insurance and positively impact policy claims, risk selection, & fraud detection. Numerous research & developments are being conducted toward expanding its utilization globally.
The Global Telematics Insurance Market is anticipated to grow at a CAGR of around 34% during the forecast period, i.e., 2021-26. The growth of the market is likely to be driven primarily by the reducing costs of connected car solutions, stringent norms imposed by governments of different countries worldwide associated with driver safety, growing consumer inclination toward in-car connectivity, and the mounting penetration of smartphones worldwide. Besides, various technological advancements in the automotive insurance sector led by integrating telematics into vehicles are also driving the global market.
|Study Period||Historical Data: 2016-19|
|Base Year: 2020|
|Forecast Period: 2021-26|
|Regions Covered||North America|
|Middle East & Africa|
|Key Companies Profiled||Agero Inc., Aplicom, Intelligent Mechatronic System, Masternaut Ltd., Meta System S.p.A, MiX Telematics Ltd., Octo Telematics S.p.A, Sierra Wireless Inc., Trimble Inc., Webfleet Solutions GB, Verizon Enterprise Solutions, Telogis, Admiral, Achmea, AXA Assistance|
|Unit Denominations||USD Million/Billion|
Automotive telematics can significantly help improve driving behavior, enhance road safety, position insurance premiums with actual requirements through UBI (Usage-Based Insurance), and boost the profitability of motor insurance companies. Besides insurance & road safety improvements, telematics offers added benefits to individuals, governments, & organizations, viz., driving-style improvements to foster fuel economy, location-based services like real-time tracking, vehicle maintenance alerts, & recovery of stolen vehicles, among others.
In addition, the mounting consumer demand for high connectivity & intelligence within their vehicles and various government initiatives for promoting telematics services in their respective countries are other crucial aspects augmenting the growth of the insurance telematics market globally. Furthermore, low policy premiums and providing personalized & value-added services in insurance to effectively suffice consumer requirements are other prominent advantages of automotive insurance telematics projected to accelerate the overall market growth in the coming years.
Impact of Covid-19 on the Global Telematics Insurance Market
The advent of Covid-19 in 2020 had a tremendous impact on the Global Insurance Telematics Market, owing to a significant shift in consumer driving habits. With an abrupt drop in new vehicle sales and the ones on roads, the pandemic has helped highlight flaws in current motor insurance models. Since average miles driven across most countries worldwide declined to a great extent, owing to stringent movement restrictions & lockdowns, the shutdown of businesses, and work-from-home policies, it propelled insurance companies to refund policy premiums to their customers.
As a result, the year 2020 witnessed a mounting adoption of usage-based insurance on a global scale, which, in turn, boosted the global insurance telematics market. However, despite many insurers that have offered refunds on monthly premiums to compensate for decreased mileage & accident risks, these discounts don’t reminisce the extent of traffic reduction. The economic uncertainty & price sensitivity induced by the global crisis is projected to lead more & more vehicle owners to opt for UBI policies in the coming years as they do not wish to pay full premiums.
Based on Deployment Type:
Of both, the Cloud deployment is witnessing an increasing demand in the Global Insurance Telematics Market. The growing integration of the Internet of Things (IoT) into vehicles is the prime aspect propelling the utilization of cloud-based solutions in insurance telematics. With soaring preferences toward cloud platforms & innovative practices in the automotive sector, most market players are now offering cloud-based UBI services.
Cloud-based insurance telematics also provides insights into various risks related to driving patterns, which can help keep track of the vehicle's running activity. Additionally, it incurs lesser data storage costs than On-Premise deployment, i.e., another crucial aspect projected to fuel the adoption of cloud-based insurance telematics services and drive the global market in the years to come.
Based on Type:
Here, the demand for PHYD (Pay-How-You-Drive) model is expected to attain the highest growth rate during 2021-26. PHYD, also known as Black Box insurance, uses real-time driving data like cornering, speed, & distracted driving, among others, to more accurately compute premiums. It highly varies from conventional motor insurance policies since, with PHYD, the policy premium relies entirely upon the driving pattern while comprising other facilities like vehicle theft & roadside assistance. Moreover, it offers impressive discounts & frequent rewards for a decent driving behavior.
The burgeoning demand for PHYD insurance models is primarily due to automotive manufacturers actively developing faster & more powerful vehicles that are connected & some of them even have autopilot modes. In view of this, insurance providers are offering newer & upgraded policies by swiftly adopting advanced technologies & seeking ways to reduce costs in order to promote the emerging connected cars sector. Many companies across countries like the United States, Canada, Japan, Germany, & France, among others, have already started utilizing PHYD telematics to efficiently manage insurance costs for fleets like public transportation, driving schools, government & commercial, etc. Hence, based on these aspects, PHYD insurance offerings are expected to gain significant momentum at the global level over the coming years.
Geographically, the Global Telematics Insurance Market expands across:
Amongst all regions globally, Europe & North America are the largest Telematics Insurance Markets. Stringent regulations for insurance providers to deploy telematics devices in vehicles are driving the Europe Insurance Telematics Market. The regional market is led mainly by Italy & the UK. Of both countries, Italy has the most established insurance telematics.
Italy-based insurance companies use Black Box & smartphone application telematics to examine driving patterns. The data generated is then used for formulating risk modes, which, as a result, leads to cost-effective policy premiums for customers, especially the young generation, as premium prices for them are significantly high. Furthermore, mobile apps with ADAS (Advanced Driver Assistance Systems) technologies are a crucial headway for fleet management in Italy since it has been facing a few challenges over the past few years. Hence, the above-cited aspects project remunerative opportunities for the telematics insurance market across Europe in the coming years.
On the other hand, with the extensive presence of leading market players, rapid technological advancements, and a massive demand for interconnected services, North America is also contributing notably to the growth of the telematics insurance market. Insurance providers across the region are increasingly adopting cloud-based solutions and shifting applications & data to the cloud network in order to maintain a highly competitive advantage. Moreover, the mounting adoption of Mobility-as-a-Service and increasing collaborations between OEMs, insurers, and telematics providers across the US & Canada are other crucial aspects driving the regional market.
Key Questions Answered in the Market Research Report:
Frequently Asked Questions
A. The Global Telematics Insurance Market is projected to grow at a CAGR of around 34% during 2021-26.
A. The growing consumer inclination toward in-car connectivity and stringent norms imposed by governments of different countries worldwide associated with driver safety are the most prominent aspects projected to drive the Global Telematics Insurance Market in the coming years.
A. PHYD (Pay-How-You-Drive) is anticipated to emerge as an area of remunerative opportunities for the leading players in the Global Telematics Insurance Market through 2026.