Global demand for usagebased insurance (UBI) will reach almost $US150 billion ($203 billion) by 2031, five times the size of the market last year, consultancy Fact.MR says.

The constraints of conventional automotive insurance will boost the growth of usage insurance over the next ten years, it says.

“Growing complexities in the one-size-fits-all approach associated with general automotive insurance is prompting increased uptake of UBI, which is far more dynamic and accurate in nature,” it says.

The pandemic lowered UBI sales in the short-term, though electric vehicle user demand was sustained. Adoption of technologies such as odometers, smartphones and OBD dongles has shaped consumer driving behaviour.

“With artificial intelligence, insurance tech companies are conquering new grounds in the digital age,” Fact.MR said. “With the help of machine learning, data modelling, and predictive analysis, insurers enhanced bottom lines and improved customer service by applying artificial intelligence across the entire insurance chain.”

Fact.MR expects that the global market will surge at a compound annual growth rate of over 17% from 2021 to 2031 as incentives for better driving habits will increase drivers' motivation to improve their driving behaviour.

UBI uptake grew 10% to be valued at $US30 billion ($40.5 billion) last year.

The US will capture half of the global usage insurance demand across the decade while Europe is likely to register an expansion rate of 10% in value and Asia is expected to record “staggering” annual growth of 15% from 2021 to 2031 as increasing adoption of telematics and IoT drives market growth in Japan, China, India, and South Korea and governments address vehicle safety.

Pay-as-you-drive is expected to account for 55% of global market revenue by 2031 and smartphone-based usage insurance is likely to expand 9% a year over the next decade.

“Smartphone apps have enabled millennials to find out their driving safety or determine their score, and to share it on social media to gain popularity. With smartphones being the main method of knowing the score, UBI is growing,” Fact.MR said.