Usage-Based Insurance (UBI) Market Size, CAGR & Forecast, 2025-2035

Telematics Pricing Is Moving From Niche Discount to Core Motor Underwriting, Lifting UBI Premiums Above USD 236 Billion by 2035

Motor premiums written on usage-based insurance (UBI) terms totaled USD 52.60 Billion worldwide in 2025, and Radial Insights projects USD 61.12 Billion in 2026 and USD 236.07 Billion by 2035, a 16.20% CAGR. All values are in USD Billion.

The Usage-Based Insurance (UBI) market covers gross written premium on private and commercial motor policies where price is set or adjusted with driving data: miles driven, time of day, speed, braking, phone use and location. It includes pay-as-you-drive, pay-how-you-drive and manage-how-you-drive policies collected through smartphone apps, OBD-II dongles, black boxes, tags and embedded connected-car systems. It excludes standard motor policies that give a one-time discount for installing a device without using the data in pricing, standalone fleet telematics subscriptions and non-motor insurance.

The OEM and embedded insurance channel is the fastest-growing segment at a 25.10% CAGR, as automakers such as Tesla and Toyota feed vehicle data straight into quotes. Embedded OEM telematics, the matching technology segment, grows at 24.30% a year, while OBD-II dongles fade at 8.60%.

Asia Pacific (APAC) grows fastest at a 21.40% CAGR, led by Japan, China and India, while North America holds almost half of global UBI premium. The Maryland Insurance Administration found that 13.23% of in-force policies in the state used telematics in 2023, up from 9.49% in 2021, and Italy's IVASS put black box contracts at 17.2% in the second quarter of 2025.

Privacy rulings are now shaping the market as much as technology. The US Federal Trade Commission's order against GM and OnStar, finalized in January 2026, and the Texas lawsuit against Allstate and Arity have moved the industry toward clear opt-in consent.

Embedded Car Data and App-Based Scoring Replace Plug-In Dongles Across UBI Segments

Radial Insights segments the Usage-Based Insurance (UBI) market by policy model, technology, vehicle type and distribution channel. The table gives each segment's growth rate from 2025 to 2035. The steepest contrast is in technology, where embedded vehicle data grows almost three times as fast as plug-in dongles.

Manage-how-you-drive policies grow fastest

Pay-as-you-drive policies, which price mainly on mileage, grow at 14.80% a year and suit low-mileage drivers served by Allstate's Milewise and Nationwide's SmartMiles. Pay-how-you-drive policies, which score braking, speed and phone use, grow at 16.90%. Manage-how-you-drive programs grow fastest at 18.70% because they add real-time feedback, crash detection and coaching, which lowers claims rather than only measuring them.

Embedded OEM telematics outpaces every other technology

Embedded OEM telematics grows at 24.30% a year as connected cars send data directly with driver consent. Root offers instant telematics quotes to connected Toyota and Lexus owners through Connected Analytic Services, and Tesla Insurance prices from real-time vehicle data. Smartphone apps grow at 18.90% because they need no hardware. Black box and tag devices grow at 10.40%, supported by Italy's large installed base, while OBD-II dongles grow at only 8.60% as insurers phase them out.

Passenger cars lead while commercial fleets follow

Passenger cars grow at 16.60% a year and account for most policies. Light commercial vehicles grow at 15.20% as small business fleets use telematics for both safety and pricing. Heavy commercial vehicles grow at 14.30%; most trucks already carry fleet telematics, so growth depends on insurers using that data in premiums.

Embedded sales channels grow fastest

The OEM and embedded insurance channel grows at 25.10% because automakers can quote at the point of sale with data already in the car. Direct and digital channels, led by Progressive, Root and Lemonade, grow at 18.10%. Agents and brokers grow at 13.40%; J.D. Power reported in January 2026 that only 17% of insurers offered UBI to shoppers, which shows how much of the agent channel is still untouched.

Market Trends

Telematics platforms are raising large rounds and signing global insurers

In March 2026, Cambridge Mobile Telematics raised USD 350 million in a round led by TPG Rise Funds with Allianz X, with State Farm taking part, and signed long-term agreements with Allianz Partners. CMT reports more than 55 million drivers, 25 countries and 140 programs. In May 2026, OCTO Telematics formed a claims alliance with Sedgwick, drawing on more than 20 million profiled drivers and 610 billion kilometers of data.

Consent and privacy rules are being written by enforcement

In January 2025, Texas sued Allstate and its data unit Arity, alleging that software inside mobile apps collected driving data on more than 45 million Americans. In January 2026, the FTC finalized its order against GM and OnStar, which bars GM for five years from sharing precise location and driving data with consumer reporting agencies. In March 2026, a federal court in Chicago let a consolidated class action against Allstate and Arity proceed.

Automakers are moving into insurance

In December 2025, Tesla Insurance entered Florida, its first new state in about three years, bringing its footprint to about 13 states. Root reported 481,869 policies in force for 2025 and record net income of USD 40.3 million in February 2026, helped by its Toyota partnership. Car data is becoming a direct route to a quote.

Digital insurers keep expanding state by state

In July 2025, Lemonade launched Lemonade Car in Indiana, giving it access to states that make up about 42% of the US car insurance market. In June 2025, Nationwide ranked highest for customer satisfaction among usage-based insurers in J.D. Power's 2025 U.S. Auto Insurance Study.

Restraints and Challenges

Privacy lawsuits and consent rules raise legal risk

The Texas case against Allstate and Arity was the first lawsuit under a US state comprehensive privacy law, and the consolidated federal class action allowed in March 2026 keeps Wiretap Act and Fair Credit Reporting Act claims alive. The GM order runs for 20 years and requires explicit consent before connected-vehicle data is collected or shared. Insurers that buy third-party driving data now face higher legal costs and slower data access.

Some drivers pay more, which slows enrollment

The Maryland Insurance Administration's 2025 telematics survey found that 31% of enrolled policies saw a premium decrease but 23.6% saw an increase. Drivers who expect a discount and receive a surcharge often leave programs, and regulators are asking for clearer disclosure of how scores affect price.

Penetration has stalled in mature markets

Italy has one of the world's largest black box bases, yet IVASS data put black box contracts at 17.2% in the second quarter of 2025, down from 18.1% a year earlier. In June 2026, Italy's competition authority and IVASS opened an inquiry into motor pricing, including whether black boxes make it harder to switch insurer, and the rules on data portability are still not adopted.

Driving data must link to measurable risk

UBI scores target the behaviors that cause crashes, such as speeding and phone use, which NHTSA identifies as leading safety risks. Insurers must show regulators that each scoring factor predicts loss and does not stand in for protected traits. California, the largest US auto market, still limits telematics in rating, and Progressive offers Snapshot in every state except California according to its 2025 annual report.

Growth Drivers

Smartphone and tag telematics now work at scale

Programs no longer need a device fitted to the car. Cambridge Mobile Telematics runs more than 140 programs for more than 55 million drivers through smartphone apps and small tags, and OCTO Telematics has profiled more than 20 million drivers. Progressive's Snapshot has logged more than 100 billion miles and given USD 2.2 billion in discounts since 2009, while State Farm's Drive Safe & Save offers 10% for signing up and up to 30% based on driving. The IoT Insurance Observatory counted more than 21 million US policyholders sharing telematics data in 2024. Radial Insights estimates that low-cost app-based collection adds about 2.6 percentage points to the market's yearly growth rate, the largest single driver, because it lowers the cost of signing each new driver to near zero.

The effect is strongest in the smartphone app segment, which grows at 18.90% a year, and in the direct and digital channel. Insurers such as Root and Lemonade can quote and enroll a driver inside an app in minutes.

Rising claims costs push insurers to price per driver

Repair costs for cars with sensors and cameras, higher medical bills and larger jury awards have pushed motor premiums up since 2022. Progressive, the largest US user of telematics pricing, grew net premiums written by about 12% to about USD 83.2 billion in 2025 with a combined ratio of 87.4, and its pricing relies heavily on driving data. Competitors that cannot separate safe and risky drivers lose good customers to insurers that can. Telematics also cuts claims costs through crash detection and faster first notice of loss, as the OCTO and Sedgwick alliance shows. We estimate the pricing pressure from claims inflation lifts the growth rate by roughly 1.9 points a year, mostly in North America and Europe.

Connected cars feed data straight into quotes

New vehicles ship with modems that can share data with consent, which removes the need for an app. Root uses Toyota's Connected Analytic Services to give instant telematics quotes, Tesla Insurance prices from real-time vehicle data in about 13 states, and Generali has motor partnerships with BMW and Volvo in Italy. As consent rules become clearer after the GM order, more automakers are likely to build opt-in insurance offers. This adds close to 1.5 points of annual growth and lifts the OEM and embedded insurance channel to a 25.10% CAGR.

Opportunities

Young and new drivers

Young drivers pay the highest premiums and benefit most from proving safe behavior. UK insurers such as Marmalade use app and tag telematics for learner and newly qualified drivers, and similar programs can spread in Asia Pacific (APAC) and Latin America, where young driver numbers are growing.

India and Southeast Asia

India's insurance regulator IRDAI allowed pay-as-you-drive and pay-how-you-drive add-ons in July 2022, opening a large market of new car buyers. With Asia Pacific (APAC) forecast to rise from USD 9.78 Billion in 2025 to USD 68.03 Billion by 2035, insurers that partner with car makers and app platforms in India, Indonesia and Thailand can grow quickly from a small base.

North America Writes Almost Half of UBI Premium While Asia Pacific (APAC) Grows Fastest

North America

North America holds a 48.30% share of the Usage-Based Insurance (UBI) market, worth USD 25.41 Billion in 2025, and is expected to reach USD 97.37 Billion by 2035 at a 14.38% CAGR. Progressive, State Farm, Allstate and Nationwide run the largest North America programs, and Progressive's Snapshot is offered in every US state except California. The Maryland regulator found telematics in 13.23% of in-force policies in 2023, and privacy cases against GM and Allstate are setting consent rules across North America.

Europe

Europe accounts for a 27.40% share, or USD 14.41 Billion in 2025, and is projected to reach USD 53.90 Billion by 2035 at a 14.10% CAGR. Italy is the largest UBI market in Europe, with black boxes in 17.2% of motor contracts in the second quarter of 2025 according to IVASS. The UK uses telematics mainly for young drivers, and Generali, Allianz and OCTO Telematics are the leading European players.

Asia Pacific (APAC)

Asia Pacific (APAC) holds an 18.60% share, valued at USD 9.78 Billion in 2025, and is forecast to reach USD 68.03 Billion by 2035, the fastest rate at 21.40%. Japan's Aioi Nissay Dowa Insurance works with Toyota on connected-car insurance, China is building a dedicated insurance platform for new energy vehicles under January 2025 guidelines, and India has allowed pay-as-you-drive add-ons since July 2022, so Asia Pacific (APAC) gains from both car data and new drivers.

Latin America

Latin America has a 3.20% share, worth USD 1.68 Billion in 2025, and is expected to reach USD 9.75 Billion by 2035 at a 19.20% CAGR. Brazil and Mexico lead Latin America, where stolen vehicle tracking devices already fitted to many cars give insurers a base for adding driving-behavior pricing.

Middle East

The Middle East holds a 1.60% share, valued at USD 0.84 Billion in 2025, and is set to reach USD 4.67 Billion by 2035 at an 18.70% CAGR. The United Arab Emirates and Saudi Arabia have high smartphone use and compulsory motor cover, and Middle East insurers are testing app-based discounts for safe drivers.

Africa

Africa accounts for a 0.90% share, or USD 0.47 Billion in 2025, and is forecast to reach USD 2.33 Billion by 2035 at a 17.30% CAGR. South Africa is the most advanced UBI market in Africa, where insurers have offered app-based driving rewards for more than a decade.

Recent Developments

• In June 2026, Italy's competition authority AGCM and insurance regulator IVASS opened an inquiry into motor insurance pricing, including the role of black boxes in switching insurers.

• In May 2026, OCTO Telematics and Sedgwick formed a telematics claims alliance built on data from more than 20 million drivers.

• In March 2026, Cambridge Mobile Telematics raised USD 350 million in a round led by TPG Rise Funds with Allianz X.

• In February 2026, Root reported 481,869 policies in force for 2025 and record net income of USD 40.3 million.

• In January 2026, the US Federal Trade Commission finalized its order barring GM from sharing drivers' location and driving data with consumer reporting agencies for five years.

• In December 2025, Tesla Insurance expanded to Florida, its first new state in about three years.

Large US Carriers Lead on Premium While Telematics Platforms and Automakers Control the Data

The Usage-Based Insurance (UBI) market has two layers. Insurers write the premium and carry the risk, while technology providers collect and score the data. Scale in both layers matters, since more miles of data improve pricing models.

Large personal lines carriers

Progressive runs the largest US UBI program, Snapshot, and wrote about USD 83.2 billion of net premiums in 2025. State Farm offers Drive Safe & Save with discounts of up to 30% and is an investor in Cambridge Mobile Telematics. Allstate runs Drivewise and the mileage-based Milewise through its data unit Arity, which faces privacy litigation. Nationwide sells SmartRide and SmartMiles and ranked first for UBI customer satisfaction in J.D. Power's 2025 study.

Digital and OEM insurers

Root Inc. prices mainly on telematics and reached 481,869 policies in force at the end of 2025, with access to Toyota connected-car data. Lemonade sells Lemonade Car through its app in states covering about 42% of the US market. Tesla Insurance uses real-time vehicle data in about 13 states and is the clearest example of an automaker acting as insurer.

Telematics and data providers

Cambridge Mobile Telematics is the largest smartphone telematics provider, with more than 55 million drivers and USD 350 million in fresh funding. OCTO Telematics leads in black boxes and claims analytics in Europe. LexisNexis Risk Solutions and Verisk run data exchanges that pass connected-car data to insurers, though GM ended its deals with both.

European and Asian insurers

Generali uses black box and OEM data in Italy and owns UK telematics firm MyDrive. Allianz is expanding telematics through Allianz Partners and its investment arm Allianz X. Aioi Nissay Dowa Insurance in Japan works with Toyota on connected-car products, and Marmalade serves young UK drivers with app and tag programs.