North America Insurance Telematics Market Size & Share Analysis - Growth Trends & Forecasts (2025 - 2030)

North America Insurance Telematics Market Trends

Increasing Adoption of Usage-Based Insurance by Insurance Companies

The insurance industry is witnessing a significant shift toward usage-based insurance (UBI) programs as insurers seek to provide more personalized and data-driven coverage options. According to an Insurance Research Council survey, 45% of US drivers reported improving their driving behavior after enrolling in telematics programs offered by their insurers, demonstrating the positive impact of UBI on road safety. This transformation is further evidenced by the increasing claims costs, with the Insurance Information Institute reporting that the average value of private passenger automobile comprehensive insurance claims for physical damage in the United States reached USD 2,738 in 2022, driving insurers to adopt more sophisticated risk assessment methods through telematics.

The market is seeing continuous innovation in usage-based insurance offerings, with several major developments in 2023 highlighting this trend. In September 2023, Definity launched its Sonnet Shift product, marking Canada's first UBI offering to provide quarterly price adjustments based on recent driving scores. Similarly, in October 2023, OCTO Telematics partnered with Flexcar to integrate connected vehicle capabilities across their US fleet, focusing on continuous vehicle monitoring and collision assistance. These developments demonstrate how insurance companies are leveraging telematics data to offer more accurate pricing models and improve customer engagement while promoting safer driving habits through real-time feedback and incentives.

Increase in Innovation in the Automotive Industry Across the Region to Witness the Growth

The automotive industry's rapid technological advancement, particularly in connected and autonomous vehicle technologies, is creating unprecedented opportunities for insurance telematics integration. According to the Insurance Institute for Highway Safety, projections indicate approximately 3.5 million self-driving vehicles will be on US roads by 2025, increasing to 4.5 million by 2030, though these vehicles will operate autonomously under specific conditions. This evolution is complemented by the growing electric vehicle market, with KBB reporting nearly 258,900 battery-electric vehicles sold in the US during the first quarter of 2023, representing a 44.9% year-over-year increase and demonstrating the industry's shift toward more technologically advanced vehicles requiring sophisticated automotive telematics solutions.

Recent technological partnerships and innovations further illustrate this trend's momentum. In February 2024, HARMAN and Qualcomm Technologies launched HARMAN Ready Connect, the first-of-its-kind telematics control unit for automotive connectivity, pushing the boundaries of vehicle communication capabilities. Additionally, Kia's strategic agreement with LexisNexis Risk Solutions in February 2024 enables the integration of connected vehicle data with auto insurers in the United States through a telematics exchange, showcasing how automotive manufacturers are actively collaborating with insurance technology providers to enhance the connected car ecosystem. These innovations in vehicle technology, combined with the increasing integration of 5G connectivity, advanced driver assistance systems (ADAS), and embedded telematics systems, are creating a robust foundation for the expansion of connected car insurance applications.

Segment Analysis: By Revenue Models

Pay-How-You-Drive (PHYD) Segment in North America Insurance Telematics Market

The Pay-How-You-Drive (PHYD) segment represents a significant portion of the North America Insurance Telematics Market, emerging as a transformative approach to auto insurance pricing. This innovative model considers comprehensive driving behavior metrics, including speeding patterns, braking habits, acceleration tendencies, cornering behavior, and overall driving patterns to determine premium rates. Insurance providers have widely adopted this model due to its ability to provide more accurate risk assessment through real-time monitoring of driving behavior. The implementation of PHYD insurance has been particularly successful through various telematics tracking devices that record and relay driving information to insurers, enabling them to offer personalized premium adjustments based on demonstrated driving skills. Major insurance companies across North America have integrated PHYD insurance solutions into their offerings, with many providing their clients online access to their driving data, fostering transparency and encouraging safer driving habits.

Manage-How-You-Drive (MHYD) Segment in North America Insurance Telematics Market

The Manage-How-You-Drive (MHYD) segment is experiencing rapid growth in the North America Insurance Telematics Market, driven by its comprehensive approach to driver behavior improvement and risk management. This advanced model builds upon traditional telematics capabilities by incorporating real-time driver engagement and personalized coaching elements. MHYD solutions provide drivers with specific, individual guidance that functions like a personal trainer to enhance driving techniques, offering detailed information about each journey, including distance, travel time, driving style assessment, and specific event reporting. The segment's growth is further accelerated by its integration of advanced analytics that explain why certain behaviors receive negative assessments, such as when braking occurs during severe speeding or specific sequences of maneuvers, enabling drivers to understand and improve their driving patterns more effectively.

Remaining Segments in Revenue Models

The Pay-As-You-Drive (PAYD) segment continues to play a vital role in the North America Insurance Telematics Market, offering a straightforward approach based primarily on distance traveled. This model particularly appeals to low-mileage drivers and those seeking more basic usage-based insurance options. PAYD insurance utilizes tracking devices to monitor mileage and basic driving patterns, providing a simpler alternative to the more complex PHYD and MHYD models. The model has gained particular relevance in the post-pandemic era, as many consumers seek insurance options that better reflect their actual vehicle usage patterns, especially with the increase in remote work arrangements and changing commuting habits.

Segment Analysis: By Hardware Type

Embedded Segment in North America Insurance Telematics Market

The embedded hardware segment holds a dominant position in the North America insurance telematics market, driven by its comprehensive capabilities and deep integration with vehicle systems. Embedded telematics enables access to a wide range of sensors in connected vehicles that provide detailed and granular levels of data required by insurance companies to monitor driving patterns. These systems can track critical trip data signals, including ignition data, odometer readings, engine coolant temperature, engine RPM, seat belt usage, and various warning indicators. Unlike other solutions, embedded telematics provides insurers with direct access to vehicle data without requiring aftermarket devices, making it particularly valuable for usage-based insurance programs. The segment's strength is further reinforced by increasing partnerships between automotive manufacturers and insurance providers to leverage embedded telematics capabilities for more accurate risk assessment and premium calculations.

Smartphone-based Segment in North America Insurance Telematics Market

The smartphone-based telematics segment is experiencing the fastest growth trajectory in the North America insurance telematics market, driven by its accessibility, cost-effectiveness, and technological advancements. This growth is supported by significant enhancements in smartphone technology, particularly in sensor capabilities from manufacturers like Apple and Samsung. The segment's expansion is further accelerated by the increasing adoption of 5G technology, which enhances data transmission speeds and reduces latency in telematics applications. Insurance providers are increasingly favoring smartphone telematics solutions due to their scalability, affordability, and frictionless implementation compared to traditional hardware-based approaches. The segment is also benefiting from continuous innovations in mobile telematics technology, including advanced AI-powered analytics and improved accuracy in measuring driving behavior through sophisticated smartphone sensors.

Remaining Segments in Hardware Type

The portable telematics segment continues to play a significant role in the North America insurance telematics market, offering unique advantages for specific use cases. Portable devices, which are typically plugged into the vehicle's onboard diagnostics port, provide a reliable solution for monitoring vehicle operation and driver behavior monitoring. These devices are particularly valuable for their ease of implementation and ability to focus on specific functions or areas of interest, such as driver behavior monitoring or vehicle diagnostics. The segment maintains its relevance through continuous innovation in portable device capabilities, including advanced GPS technology, G-force monitoring, expandability options, and in-vehicle audible driver coaching features. The portable segment serves as a bridge between traditional telematics solutions and newer technologies, particularly appealing to organizations seeking standalone monitoring options without extensive infrastructure modifications.

North America Insurance Telematics Market Geography Segment Analysis

North America Insurance Telematics Market in United States

The United States dominates the North American insurance telematics landscape, commanding approximately 88% of the market share in 2024. The country's leadership position is driven by the substantial presence of automotive OEMs, high levels of technology awareness among car buyers, and widespread adoption of 4G/5G technologies. The market is witnessing significant transformation through continuous product launches and technological innovations. The integration of artificial intelligence, IoT, and advanced vehicle telematics devices is revolutionizing how insurance providers assess risk and determine premiums. The country's robust automotive sector, coupled with stringent government regulations supporting driver and vehicle safety, creates a favorable environment for insurance technology adoption. The presence of major players and their focus on developing advanced solutions for connected vehicles further strengthens the market position. Additionally, the increasing preference for usage-based insurance programs and the growing electric vehicle segment are creating new opportunities for telematics-based insurance solutions.

North America Insurance Telematics Market in Canada

Canada emerges as the fastest-growing market in the North American insurance telematics landscape, projected to expand at an impressive CAGR of approximately 37% from 2024 to 2029. The country's insurance telematics sector is experiencing rapid evolution, driven by stringent regulations for insurance providers to deploy telematics devices in vehicles. Insurance companies are increasingly adopting both black box and smartphone application telematics to examine driving patterns and formulate risk models. The market is witnessing significant transformation through mobile apps with Advanced Driver Assistance Systems (ADAS) technologies, particularly beneficial for fleet management. Canadian insurers are actively launching innovative solutions to help motorists enhance their driving behavior and potentially save money at renewal. The focus on road safety and the implementation of comprehensive monitoring systems through smartphone applications is reshaping the digital insurance landscape. Furthermore, the country's emphasis on developing usage-based insurance models and rewarding safe driving habits is creating a more dynamic and responsive connected insurance environment.

North America Insurance Telematics Market in Other Countries

The North American insurance telematics market primarily revolves around the United States and Canada, with these two nations driving the majority of innovations and adoptions in the sector. The regional market benefits from advanced technological infrastructure, strong regulatory frameworks, and high consumer awareness about telematics-based insurance solutions. The integration of connected car technologies, advancement in smartphone-based telematics applications, and the growing emphasis on usage-based insurance models are common themes across the region. The market is characterized by continuous innovation in telematics devices, data analytics capabilities, and customer engagement strategies. Insurance providers across North America are increasingly focusing on developing comprehensive telematics solutions that cater to both personal and commercial vehicle segments, while ensuring data privacy and security compliance across jurisdictions.