In 2015, close to 12 million consumers globally subscribed to this type of insurance, according to a report from IHS Automotive, part of IHS Inc. and a source of information to the global automotive industry. The number of consumer subscribers to UBI is expected to grow to 142 million globally by 2023, according to the IHS report.

This specific type of automobile insurance uses real-time information about a driver’s actual driving ability and habits to assess actuarial risk, capturing information from the in-vehicle telematics system. In the decade or so since its initial launch, UBI has inspired as much frustration as hope from its believers and practitioners. Expectations were high from the start, but these expectations were long thwarted by market stagnation and the reluctance of insurers to embrace the solution.

“The current UBI landscape is in transition with robust expansion,” said Stacey Oh, manager, automotive technology at IHS Automotive. “New insurers are entering the market, new markets are being opened and new solutions are being launched.”

However, providers are still identifying and developing the strongest business models, the best value proposition and the most suitable data capture device as those providers seek to alleviate divergence with the auto industry. The added challenge of constantly evolving technology -- including telematics, the connected car and mobility itself -- are influencing factors.

Regional leaders, markets to watch

Today, Italy is the only country in which UBI has a double-digit share of the insurance market, representing 10 percent of the market there in 2015, according to the IHS Automotive report. Government intervention was a strong influencer there.

Italy and the United Kingdom are by far the most mature UBI markets in Europe. Activity is growing in France, Germany and Spain, though the solution remains very niche-like in these markets. Insurers are unsure of what business propositions work best and consumers are still unfamiliar with the product. Privacy concerns, especially in Germany, make consumers wary of sharing data.

Due to its market potential, the U.S. will lead the way in UBI marketing and innovation in the coming year, IHS says. America is the largest car insurance market in the world, with more than 260 million vehicles in operation in 2015. According to IHS estimates, there were more than 5 million UBI policyholders in 2015 in the U.S., by far the most of any other country. Italy was a distant second, with just 3.6 million subscribers out of 36.8 million vehicles in operation in 2015.

Another key market to watch is China. The Chinese government began granting foreign insurance carriers access to the market in 2012, and approximately 15 insurers will launch UBI pilot programs this year. The sheer size of the automotive market allows for the UBI subscriber volumes to grow from 50,000 in 2015 to over 22 million by 2023, according to IHS Automotive forecasts.

Source: IHS