Usage Insurance Market to Reach USD 28.8 Billion by 2035 — Telematics, Data Analytics, and Personalized Premium Models Reshape the Global Insurance Landscape

The global usage insurance market is witnessing rapid expansion, driven by technological innovation and evolving consumer demand for customized insurance solutions. According to a recent report by Fact.MR, the market is projected to grow from USD 10.7 billion in 2025 to USD 28.8 billion by 2035, advancing at a robust CAGR of 10.4% during the forecast period (2025–2035).

This surge is attributed to the increasing adoption of telematics, integration of AI-driven data analytics, and the shift toward behavior-based premium models. Insurers are leveraging connected car technologies and real-time driving data to create more transparent, affordable, and customer-centric insurance solutions.

Quick Stats for the Usage Insurance Market

• Market Value (2025): USD 10.7 billion
• Forecast Value (2035): USD 28.8 billion
• CAGR (2025–2035): 10.4%
• Leading Applications: Pay-As-You-Drive (PAYD), Pay-How-You-Drive (PHYD), Manage-How-You-Drive (MHYD)
• Top Growth Regions: North America, Europe, Asia-Pacific
• Notable Companies: Insure the Box, AllState Insurance Company, State Farm, Uniqa, Groupama, Generali, Progressive, Metromile, Root Insurance, Uniposai, Liberty Mutual, Allianz SE

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Why the Market is Growing

The rise of connected vehicles, IoT integration, and real-time risk assessment is redefining how insurers and consumers interact. By using in-vehicle telematics and mobile tracking, insurers can assess driving patterns, mileage, and safety behaviors, allowing for fairer pricing and enhanced risk mitigation.

• Telematics Revolution: Real-time data collection enables dynamic pricing based on driver behavior, distance traveled, and road conditions.
• Consumer Personalization: Customers prefer transparent pricing models that reward safe driving and reduce costs.
• AI & Big Data Integration: Machine learning models enhance underwriting accuracy and predictive risk assessment.
• Regulatory Support: Governments in Europe and North America promote telematics-based insurance as part of smart mobility initiatives.
• Safety Incentives: Encouragement of safe driving habits helps reduce accidents and insurance claim rates.

Segmental Analysis

1. Pay-As-You-Drive (PAYD) Segment Dominates

PAYD models are witnessing widespread adoption as consumers seek cost-efficient insurance plans based on actual vehicle usage. Insurers offering PAYD gain a competitive edge through customer trust and retention.

1. Pay-How-You-Drive (PHYD) Gaining Momentum

PHYD policies are gaining traction among tech-savvy and younger drivers. The segment benefits from advancements in telematics hardware and smartphone-based tracking applications.

1. Fleet Management and Commercial Usage

Enterprises are deploying usage-based insurance for commercial fleets to reduce operational costs and monitor driver performance, boosting safety compliance.

Regional Outlook

• North America: Leads the global market due to advanced telematics adoption, widespread connected vehicle use, and early regulatory approval of UBI (Usage-Based Insurance).
• Europe: Strong focus on sustainability, safe mobility, and government-backed digital insurance frameworks.
• Asia-Pacific: Rapid urbanization, increasing car ownership, and mobile connectivity in countries like China, Japan, and India are accelerating telematics-based insurance uptake.
• Latin America & MEA: Growing awareness of driver safety and gradual digitalization in the insurance industry present untapped opportunities.

Market Dynamics

Key Growth Drivers

• Rising consumer demand for fair, usage-based pricing models.
• Growing integration of telematics devices and smartphone-based data analytics.
• Supportive government policies for road safety and connected mobility.
• AI-enhanced claim processing and predictive risk modeling.

Challenges

• Data privacy and cybersecurity concerns.
• High initial investment in telematics infrastructure.
• Limited consumer awareness in emerging markets.

Competitive Landscape

Key players are actively expanding their telematics platforms, forming partnerships with automakers, and enhancing mobile app interfaces to improve user experience.

• Global Leaders: Progressive, Allianz SE, and Liberty Mutual dominate with comprehensive telematics-based solutions and strong customer networks.
• Regional Specialists: Insure the Box, Generali, and Groupama lead in Europe with behavior-based premium models.
• Emerging Innovators: Root Insurance, Metromile, and Uniqa are leveraging AI algorithms and mobile tracking for agile policy management.

Recent Developments

• June 2025: Progressive announced the expansion of its "Snapshot" telematics program to include commercial fleet coverage.
• April 2025: Root Insurance launched an AI-powered app that uses real-time smartphone sensors to monitor driver behavior.
• January 2025: Allianz SE invested in connected vehicle analytics to enhance usage-based policy offerings across Asia and Europe.

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Future Outlook

The usage insurance market is poised to transform global insurance dynamics, bridging the gap between consumer demand and technological innovation. With connected vehicles and AI at the forefront, insurers focusing on data-driven underwriting, transparency, and personalization will gain a decisive advantage.

As telematics adoption deepens, the market will continue to evolve from reactive claim-based models to proactive risk management systems, ensuring safer roads and smarter insurance solutions worldwide.

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About Fact.MR

Fact.MR is a global market research and consulting firm, trusted by Fortune 500 companies and emerging businesses for reliable insights and strategic intelligence. With a presence across the U.S., UK, India, and Dubai, we deliver data-driven research and tailored consulting solutions across 30+ industries and 1,000+ markets. Backed by deep expertise and advanced analytics, Fact.MR helps organizations uncover opportunities, reduce risks, and make informed decisions for sustainable growth.