Depending on which report you read, somewhere between 3 million and 5 million drivers are now taking advantage of telematics-fueled usage-based insurance (UBI) programs worldwide. Aite Group believes that the larger figure includes commercial lines, so on a global scale the UBI market has remained relatively small and undeveloped. Aite Group estimates that by the end of this year, 75 P&C carriers (out of a universe of 3,500) will have launched UBI pilots in the United States.
This relatively unimpressive number is about to change, however, as advancements in telematics technologies, along with an approximate 80 percent drop in hardware costs, ratchet up the industry’s interest in UBI. Consider that automakers will have added 1 billion new cars on roads around the world by 2023, about 150 million of them in the United States alone. These cars will be outfitted with a variety of standard telematics technologies, creating a consumer expectation and an opportunity for insurers that want to get in the UBI game. The vendor community is anxious to be included in the playbook, too. Aite Group estimates that more than 250 vendors are champing at the bit for their share of the UBI market.
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