How to make UBI work in Latin America?

UBI beyond the experimentation phase

Usage-based insurance is still a relatively small part of Latin America’s motor insurance market. But its strategic importance is increasing.

For insurers, UBI is no longer merely a telematics initiative or a means of offering discounts to low-mileage drivers. When properly designed, new models leveraging smartphones’ capabilities can support more accurate risk selection, attract uninsured customers, improve engagement, enhance driving skills, and create new opportunities for brokers, banks, OEMs, and other distribution partners.

The future market leaders will be defined now, as the market grows and finds its place. MAPFRE valued Latin America’s insurance market at $215 billion in 2024, an increase of 5.8% from the previous year. Motor generated 17% of regional premiums but grew by only 2.6%. Premiums across all insurance lines totalled 3.2% of regional GDP, while the Insurance Protection Gap, the gap between needed and actual insurance coverage, was estimated at $316 billion. On this basis, MAPFRE placed the region’s total potential insurance market at $531 billion, approximately 2.5 times the size of the existing market.

For motor insurers, these figures point to a substantial opportunity to develop more affordable, personalised products that reflect how customers use their vehicles and can help bring more drivers into the insured market.

Brazil drives the UBI market in the region

According to PTOLEMUS’ latest UBI Global Study, over 50 UBI programmes are being operated across the region. Every analysed market has launched at least one programme during the past 5 years.

However, activity is unevenly distributed. Brazil accounted for approximately 65% of active UBI policies in the region. Argentina and Mexico formed the next tier, followed by Peru, Colombia and Chile.

Programme launches accelerated during the pandemic and peaked in 2022, driven, in part, by interest in pay-as-you-drive (PAYD) propositions. Several programmes were subsequently discontinued, but active policy volumes continued to rise, with significant growth driven by Brazil and Argentina in 2024.

This is an important sign of market development. The number of launches alone does not indicate success. The simultaneous closure of weaker initiatives and growth of stronger ones suggests that the market is beginning to consolidate around propositions that customers understand and that insurers can operate economically.

Personal line insurance continues to dominate. Only 5 of the programmes identified in the study address commercial motor customers. This is notable because fleet telematics, stolen-vehicle recovery, and vehicle tracking are already comparatively well-established in parts of Latin America. The commercial opportunity, therefore, may not require insurers to introduce entirely new technology; it may involve turning existing fleet data into better underwriting, pricing, and risk-management products.

Most programmes are run by traditional insurance companies such as AIG, Banorte, HDI, GNP, Generali, Liberty Mutual, Libra Seguros, Porto Seguro, Qualitas, Sura, Sancor Seguros, and Zurich. However, insurtech startups such as Darwin Seguros, Justos, and thinkseg are becoming more prominent and are experiencing faster growth.

Why apps are changing the economics of UBI

One of the most distinctive features of UBI in Latin America is the importance of smartphones.

In markets with high levels of fraud and vehicle theft, installed black boxes might appear to be the natural solution. Yet smartphones have become the leading technology among the programmes mapped for this analysis, ahead of OBD dongles and dedicated black boxes. The region’s 4 largest programmes use smartphone technology, including proprietary solutions developed by insurers.

The reason is largely economic.  Smartphone telematics avoids much of the cost and operational complexity associated with purchasing, installing, maintaining and recovering hardware.

It also allows an insurer to test a product, reach new territories and update the customer experience more rapidly.

But lower technology costs do not automatically produce a successful programme. Insurers still need to address trip-detection accuracy, mobile-phone permissions, battery consumption, shared vehicles, possible manipulation and incomplete data. In theft-sensitive segments, a hybrid model combining smartphone telematics with an installed black box may be more appropriate.

The technology choice should therefore follow the insurance use case, not the other way around.

Two interesting regional cases

Libra ON Auto: make the value proposition easy to understand

Libra Seguros’ time-based product in Argentina, originally associated with the Orange Time name and now marketed as Libra ON Auto, offers one of the region’s clearest customer propositions: the amount paid reflects the time the vehicle is used, while protection remains active. Using time rather than distance is very innovative.

The current offer advertises potential savings of up to 60% and combines the usage-based element with theft, damage and assistance services. It also includes enhanced claims handling and digital mechanical-assistance features. Paying per use is a very useful tool for insurers to manage high inflation, as is the case in Argentina.

The most important lesson for insurers is not the precise pricing mechanism. It is simplicity.

Customers do not necessarily want to understand telematics scoring models, data-processing architecture or actuarial algorithms. They need to understand, in one sentence, why the product is fairer or more useful: drive less, pay less, same protection.

That clarity is particularly important in price-sensitive markets where consumers may already find traditional motor insurance difficult to understand.

Darwin: combine behavioural pricing with a scalable distribution

Darwin Seguros illustrates a different approach. Its telematics model uses smartphone data to evaluate driving behaviour and support monthly pricing. It collects data from the phone’s accelerometer, gyroscope and GNSS sensors, as well as information relating to phone use while driving.

Darwin’s development also shows that UBI does not have to replace traditional motor insurance. The company subsequently introduced annual insurance alongside its monthly telematics product. Darwin has also placed brokers at the centre of its distribution model rather than depending exclusively on direct digital acquisition.

This offers 2 useful lessons.

First, insurers can use UBI selectively. A telematics product may be highly effective for new-to-insurance drivers, low-mileage customers or particular risk profiles, while a conventional annual product remains more appropriate for other segments.

Second, digital insurance does not necessarily mean direct-to-consumer insurance. Brokers, banks, vehicle finance providers and other partners can give UBI programmes access to customers at lower acquisition costs and provide reassurance when the product is unfamiliar.

Darwin is only at the beginning of its journey, and while it is gaining market share in Brazil, it still needs to prove its long-term sustainability. 

The next phase of UBI in Latin America

UBI adoption in Latin America is unlikely to follow a single model.

Smartphone-based products are likely to remain attractive in personal motor insurance because they reduce upfront costs and accelerate deployment. Installed devices will continue to have a role where theft prevention, vehicle recovery or highly reliable data are central to the proposition. In commercial motor, insurers may be able to build on telematics systems that fleets already use.

The programmes most likely to succeed will not necessarily have the most sophisticated driving score. They will be those that combine a well-defined customer segment, a simple proposition, credible pricing, efficient distribution and a reliable claims experience.

For Latin American insurers, the strategic question is therefore no longer simply whether UBI can work. It is: Which customer segment, distribution channel and data model can turn UBI into sustainable, profitable motor growth?

If you wish to understand how PTOLEMUS can help you shape your UBI programme, just contact me here.

Sources: PTOLEMUS Consulting Group UBI Global Study 5th Edition; MAPFRE Economics, Latin American insurance market results for 2024; Libra Seguros, Libra ON Auto; Darwin Seguros.

To learn more about telematics insurance and its global development, download our UBI Global Study abstract here: https://www.ptolemus.com/research/usage-based-insurance-global-study-2025/  or reach out.

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Article written by Alberto Lodieu, under PTOLEMUS copyright