Insurance Telematics in Europe and North America 9th Edition

The introduction of telematics technology in the context of automotive insurance is commonlyreferred to as usage-based insurance (UBI) or insurance telematics. Solutions of this typegenerally enable automotive insurers to improve pricing mechanisms based on actual drivingdata, gain better control of claims and differentiate their offerings to current and prospectivepolicyholders. Variants of insurance telematics which have been popularised over the yearsinclude behaviour-based pricing models such as Pay-As-You-Drive (PAYD), Pay-How-You-Drive(PHYD) and Manage-How-You-Drive (MHYD).

The addressable market for insurance telematics is significant. A total of around 339 millionvehicles were in use in the EU27+EFTA+UK in 2023, including over 294 million passenger cars.In North America, an estimated total of around 328 million vehicles were in use in 2024, out ofwhich passenger cars and light trucks represent around 311 million vehicles. Some kind of basicautomotive insurance is mandatory in most developed countries and there are in addition anumber of subcategories of insurance that provide coverage for different types of unforeseenevents involving motor vehicles. Motor gross written premiums in EU22+3 reached a total of€_152.7 billion in 2023. The equivalent number for North America was US$_456.7 billion (€ 422.0billion) in 2024.

Both Europe and North America are forecasted to be growth markets for insurance telematicsadoption in 2024–2029. Uncertain economic conditions and the cost-of-living crisis in manymarkets and their effects on the world economy are believed to drive demand for digitalinsurance business models, including insurance telematics. Europe and North Americarepresent two major markets when it comes to insurance telematics programs and activepolicies, and the front-running national markets include the US, Italy, Germany, Canada and theUK. Berg Insight estimates that the total number of insurance telematics policies in force on theEuropean market reached 13.8 million at the end of 2024. Growing at a compound annual growthrate of 7.8 percent, the number of insurance telematics policies in force in Europe is estimatedto reach 20.1 million by 2029. In North America, the total number of insurance telematics policiesin force is forecasted to increase from an estimated 20.2 million policies at the end of 2024 toreach 31.8 million policies by 2029, representing a compound annual growth rate of 9.5 percent.

In the US, most of the largest insurers in terms of UBI policies have all introduced smartphone-based solutions to supplement or replace the previously used OBD-II dongles. Several US andCanadian insurers have during recent years reassessed and re-launched their telematics programs. The North American insurance carriers are also exploring claims-related insurancetelematics and many are adding distracted driving parameters in their UBI. The Europeaninsurance telematics market is dominated by insurers in Italy, Germany and the UK, with anestimated 10.0 million, 1.5 million and 1.3 million policies respectively. Uptake on all othermarkets is considerably lower, with between 50,000 and 320,000 policies in the Nordics, IberianPeninsula, France and Benelux, and Central and Eastern Europe.

The insurance telematics value chain spans multiple industries. Insurers with notable presencein the insurance telematics market include Progressive, Unipol, State Farm, Allstate, Generali,Allianz, HUK-Coburg, Liberty Mutual, Nationwide, AXA, Groupama, Intact, Desjardins, Admiral,and Direct Line Group (acquired by Aviva). Insurance players can either develop telematicsprograms independently or rely on partners to varying degrees. Smartphone-based telematicsprograms have grown to significant market shares in the past years and insurers that havehistorically focused on hardware telematics solutions have also increased their focus onsmartphone-based solutions or started to migrate to app-based solutions.

Leading providers of UBI based on hardware telematics devices include Octo Telematics, TargaTelematics, Vodafone Automotive and FairConnect. Leading smartphone telematics vendorsinclude Cambridge Mobile Telematics, Arity, IMS and The Floow. Other leading vendors ofinsurance telematics solutions include Agero, CCC Intelligent Solutions, ClearScore, DolphinTechnologies, DriveQuant, Earnix, Greater Than, Howen Driving Data, LexisNexis Risk Solutions,MOTER Technologies, OSeven Telematics, Redtail Telematics, Scope Technology, Sentiance,Smith System, Sycada, Telematics Technologies and Valtech Mobility. Several traditional fleettelematics players including Azuga, Radius Telematics, Trakm8, Valtech Mobility and Webfleetare also active in the insurance telematics field. Examples of companies that provide hardwaretelematics devices to the market include Danlaw, Munic and Xirgo. Automotive OEMs arefurthermore increasingly taking an active part in the ecosystem. Examples include BMW, GeneralMotors, Ford, Honda, Hyundai, Mercedes-Benz, Stellantis, Tesla and Toyota.