Automotive telematics insurance is a motor insurance cover customized by monitoring real-time driving and underwriting the risk. Telematics insurance comprises a SIM card, motion sensor, GPS system, and a computer module. The telematics insurance device, also called black-box, is fitted in the OBD-II portal of the vehicle. The device captures and transfers real-time data of the vehicle to the insurance company in order to track the vehicle and analyze the accident risks based on route of commute, speed of vehicle, miles driven, and late hour ride.
Demand for low insurance premium among consumers is primarily driving the automotive telematics insurance market. Several consumers who seldom use their vehicles, do not use highways, and drive at safer speeds and have a lower risk of accidents; however, they end up paying the same premium as other customers who are insured with higher accidental risk. Therefore, telematics insurance enables such riders to be charged at lower premiums.
Insurance companies can attract low risk drivers and can positively reduce claim expenses by employing telematics. The automotive telematics insurance market is driven by the necessity of insurance companies to underwrite the risk effectively, and to be able to maintain actuarial reserves. Rising trend of vehicle connectivity is driving the automotive telematics insurance market. Mandates on adoption of telematics by governments, such as eCall in Europe, are driving the automotive telematics insurance market.
The global automotive telematics insurance market can be segmented based on technology, insurance type, vehicle, and region. Based on technology, the automotive telematics insurance market can be segregated into mobile application and embedded device. The embedded device segment is expected to lead the global market, as these are used for telematics as well as vehicle connectivity. Embedded devices are being increasingly deployed by automakers as standard fitment for vehicle connectivity and to support the telematics feature.
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In terms of insurance type, the global automotive telematics insurance market can be classified into pay-as-you-drive, pay-how-you-drive, and pay-as-you-go. The pay-how-you-drive segment is expected to expand due to its behavior based model that estimates the risk and hence, is highly effective for both the insurance company and the insured. The pay-how-you-drive type of insurance has been widely accepted by fleet owners in North America.
Based on vehicle type, the global automotive telematics insurance market can be bifurcated into passenger vehicle, light commercial vehicle, and heavy commercial vehicle. The commercial vehicle segment is projected to expand as public transport and commercial fleet owners are adopting telematics in order to reduce operational costs.
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In terms of region, the global automotive telematics insurance market can be divided into North America, Europe, Asia Pacific, Latin America, and Middle East & Africa. Europe leads the global automotive telematics insurance market owing to the high rate of adoption of telematics insurance in the U.K. and Italy. Europe is followed by North America and Asia Pacific, in terms of share of the global market, owing to the high demand of automotive telematics in the U.S., Canada, and Japan.
Key players operating in the global automotive telematics insurance market are Octo Telematics Ltd., TELOGIS, Aplicom, MiX Telematics, Agero Inc., Ctrack Maternaut Limited, Sierra Wireless, AirIQ Inc., and Trimble Inc.
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