Not all drivers are created equal. Some take tight corners at 80 mph. Others cruise cautiously on city streets. Yet for decades, auto insurance treated them the same — until now.

Usage-Based Insurance (UBI) is revolutionizing the automotive insurance landscape by shifting the focus from who you are to how you drive. And as electric vehicles (EVs) gain ground alongside internal combustion engine (ICE) vehicles, the UBI market is accelerating in both scope and sophistication. According to Stratview Research, the Usage-Based Insurance (UBI) market size was valued at US$ 43.38 billion in 2023 and is projected to grow at a robust CAGR of 7.2% during the forecast period to reach US$ 70.46 billion by 2030.

The New Normal: Personalization Over Prediction

Today’s connected vehicles generate gigabytes of data every day — from acceleration profiles to GPS-based trip logs. But traditional insurance still relies on outdated proxies: age, ZIP code, or credit score.

UBI flips this model by leveraging:

• Telematics data to track real-time driver behavior
• Mileage and usage patterns to customize pricing
• In-app feedback and rewards to promote safer driving

Stratview Research highlights that UBI adoption is growing steadily across both ICE and electric vehicle segments, driven by demand for transparency, fairness, and cost savings.

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Why EVs Are Changing the UBI Equation

Electric vehicles introduce new dynamics:

• Lower mechanical failure rates but higher repair costs
• Unique driving behavior due to instant torque and regenerative braking
• Variability in mileage due to range anxiety and charging availability
• OEM-controlled telematics platforms, opening new distribution models for insurance

As EVs become mainstream, insurers must rethink their models to reflect how EVs are actually used and driven — not just their specs on paper.

Key Segments of UBI

Stratview Research identifies three dominant UBI models:

1. Pay-As-You-Drive (PAYD): Focuses on distance covered
2. Pay-How-You-Drive (PHYD): Rewards safe, efficient behavior
3. Manage-How-You-Drive (MHYD): Adds coaching, gamification, and usage insights

These models are being adapted by both legacy insurers and InsurTech disruptors, often in partnership with OEMs or telematics providers.

Market Outlook: Fast Lane Ahead

Stratview Research indicates:

• North America leads the UBI market with widespread adoption across fleets and individual drivers
• Europe is strong in regulatory support and integration of UBI with mobility platforms
• Asia-Pacific shows high future potential as EV adoption and smart city initiatives expand
• Commercial vehicle fleets are increasingly leveraging UBI to reduce accidents and optimize costs

Major players in the space include:

• Allianz, Progressive, State Farm, and AXA
• Root Insurance, Metromile, and Cuvva among InsurTech pioneers
• OEM-linked offerings from Tesla, GM, Ford, and BYD

Strategic Implications

For insurers, mobility providers, and automakers alike, UBI is no longer a pilot program — it’s a core strategy for growth and differentiation.

To stay ahead, stakeholders must:

• Invest in secure and scalable telematics infrastructure
• Build behavior-based pricing algorithms tailored for ICE and EV drivers
• Offer flexible and transparent customer experiences
• Navigate privacy regulations with consent-based data models.