Since the First World War, four-wheelers became a popular sight on roads in developing countries. However, the vehicles were not as clean as they are today. Subsequently, the consequences of the damage to the car and to the property caused by the car had to be paid by the vehicle owner. This is where vehicle insurance was required. The U.K. implemented universal auto insurance in 1930, and countries globally followed suit. In the decades that followed, the auto insurance market underwent a developmental process and provided damage plans with add-on benefits of leveraging insurance plans.
Read Report Overview: Telematics Insurance Market
Today, internet and smartphones have transformed the way people buy insurance. Technology has made the insurance environment clear, accessible, and fast. Today, the emphasis is on going from general and conventional solutions to customized and personal solutions, which has been made possible in the insurance sector by the advent of usage-based insurance (UBI).
Traditionally, the payable rate on an auto insurance policy is often based on the type of the car (along with other things) and not on the driving ability of the driver. If two people purchase the same car from the same brand, their car insurance rates are expected to be identical. This is because of the way they choose to drive a vehicle or the distance they travel in their car on an annual basis is not taken into account while calculating their insurance premiums.
Aftermarket Segment Dominates Telematics Insurance Market
Due to the launch of revolutionary technologies by many telematics providers, the demand for auto-telematic insurance had experienced a heavy pull from the aftermarket channel during its first phase. In the aftermarket distribution channel, telematics insurance has predominantly existed. The existing business strategies, however, say otherwise. OEMs also invested in the production of telematics platforms with plans to sell them as an obligatory vehicle product in the next decade which would drive the OEM distribution channel in the near future.
Passenger Vehicles Segment Dominate the Telematics Insurance Market
Passenger vehicles are expected to lead the segment of application owing to the fact that the telematics insurance is expensive to set-up initially through the inclusion of expensive sensors and electronics. Therefore, they are more viable for passenger cars as of now, where owners who own more than a car can leverage the offering of telematics insurance due to their infrequent driving of cars. Although, commercial fleets are actively adopting telematics insurance programs in order to track their fleets and driver’s driving behavior. This would help them to better manage their fleets.
Pay As You Drive (PAYD) Dominates the Telematics Insurance Market
PAYD occupies the major chunk of the telematics insurance market. Since the inception, of telematics insurance, customers were more interested in paying their insurance premiums based on their distance driven. Therefore, basic telematic technology which uses odometer to calculate the number of kilometers travelled by the vehicle. Hence, this method of calculating the insurance premiums is fairly simple and comprehensive, which also reflects on the market share of this type of telematics insurance.
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Competitive Landscape
The competitive landscape of the telematics insurance market consists of different strategies undertaken by major players across the entire value chain to gain market presence. Some of the strategies adopted by telematics insurance providers are product launches, mergers and acquisitions, partnerships, and collaborations. Among all the strategies adopted, partnerships, collaborations, and contracts have dominated the competitive landscape. Octo Group S.p.A., Insurance and Mobility Solutions, Agero, Inc., and Verizon Communications, Inc are some of the leading players in the telematics insurance market.
