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2020

Auto Insurance Market

Auto Insurance Market Size, Share, Competitive Landscape and Trend Analysis Report by Coverage Distribution Channel, Vehicle Age and Application : Global Opportunity Analysis and Industry Forecast, 2020-2027

BI : Insurance

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Author's: Pramod Borasi| Monica Chhabra | Onkar Sumant
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Auto Insurance Market Outlook - 2027

The global auto insurance market size was valued at $739.30 billion in 2019, and is projected to reach $1.06 trillion by 2027, growing at a CAGR of 8.5% from 2020 to 2027. 

Auto Insurance Market Insights

Auto insurance provides financial protection to customers against physical damage, resulting from traffic collision and theft of vehicles. In addition, it covers the cost associated with injuries, death, or property damage caused by insured owner of the vehicle to another driver, vehicle, or property such as fence, building, or utility pole. Although auto insurance requirements vary from state to state, bodily injury liability and property damage liability coverage  has been mandated to in many jurisdictions before using or keeping a vehicle on public roads. The auto insurance market exhibits high growth potential, as the number of road accidents is increasing in most of the countries across the globe.

Segment Review

Insurance Regulatory and Development Authority of India (IRDAI) has mandated the three-year insurance policy for cars and five-year policy for motorbikes at the time of sale and registration. As per the Insurance Information Bureau (IIB), only 6.5 to 7 crore vehicles have insurance cover against approximately 18 crore registered vehicles on Indian roads. To protect insured and uninsured people from accidents, the Motor Vehicle Act imposes consumers to have compulsory third-party liability coverage, which protects insured party against financial loss in the event of bodily injury, death, and damage of property to third party. Furthermore, along with the mandatory coverage, the Motor Vehicle Act revised penalties against violation of possession of a basic Compulsory Third-Party Policy, which has brought many uninsured vehicles in the insurance domain. All these factors contributed to increase in the sale of auto insurance policies.

Rise in number of accidents, implementation of stringent government regulations for the adoption of auto insurance, and increase in automobile sales globally due to surge in per capita income of consumers are the major factors that drive the global auto insurance market growth. Moreover, adoption of autonomous vehicles hampers the growth of the market. Furthermore, implementation of technologies in existing products and service lines and rise in demand of third party liability coverage in emerging economies are expected to provide lucrative opportunity for the auto insurance market expansion during the forecast period.

Region wise, the auto insurance market was dominated by North America in 2019, and is expected to retain its position during the forecast period. The major factors that drive the growth of the market in this region include the presence of key players and rise in purchase of cars. However, Asia-Pacific is expected to witness significant growth rate during the forecast period, owing to surge in adoption of mobile telematics technology by auto insurance companies among the developing nations such as China and India. 

The report focuses on the growth prospects, restraints, and trends of the global auto insurance market analysis. The study provides Porter’s five forces analysis to understand the impact of various factors such as bargaining power of suppliers, competitive intensity of competitors, threat of new entrants, threat of substitutes, and bargaining power of buyers on the global auto insurance market.

Auto Insurance Market
By Coverage
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Third Party Liability Coverage accounted for the largest market share in 2019.

The global auto insurance market is segmented into coverage, distribution channel, vehicle age, application, and region. In terms of coverage, it is fragmented into third party liability coverage and collision/comprehensive/other optional coverages. By distribution channel, it is segregated into insurance agents/brokers, direct response, banks, and others. As per vehicle age, it is divided into new vehicle and used vehicle. Depending on application it is bifurcated into personal, and commercial. Region wise, the market is analyzed across North America, Europe, Asia-Pacific, and LAMEA.

COVID-19 Impact Analysis

The auto insurance market has witnessed significant growth in past few years; however, due to the outbreak of the COVID-19 pandemic, the market is projected to witness a sudden downfall in 2020. This is attributed to implementation of lockdown by governments in majority of the countries and the shutdown of travel across the world to prevent the transmission of virus. Therefore, to overcome these several challenges, insurers have established new developments in existing policies such as pay-as-you-drive, usage-based insurance, or telematics insurance as well as adopted technologies to enhance the claim processes and provide better user experience, despite the global health crisis.

Auto Insurance Market
By Distribution Channel
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Direct Response is projected as one of the most lucrative segments.

Top Impacting Factors

Rise in Number of Traffic Accidents

Rise in demand for auto insurance market on accidents such as traffic collision, physical damage or bodily injury, theft, and fire builds pressure on insurance companies to invest and develop such products that have less proliferation, high coverage, and provide financial security in the form of medical injury or any other damages. In recent years, accidents are increasing, in terms of road crashes, traffic injuries, drunk driving, and distracted driving for speeding, which resulted in need for auto insurance. Majority of the vehicle users depend on auto insurance to prevent themselves from future financial losses such as injuries to drivers, passengers, or pedestrians. 

In addition, auto insurance incorporates such coverages, which further help to compensate policyholder family members after his/her death. Insurance providers have been observed to increase the number of coverages in their products for enhancing the overall user interface experience and to keep ahead of their competitors in the market in the upcoming years.

Auto Insurance Market
By Application
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Commercial is expected to attain significant growth during the forecast period.

Implementation of Technologies in Existing Product and Service Lines

Increase in penetration of technologies such as GPS, telematics, artificial intelligence (AI), data analytics, blockchain, and big data is providing innovative opportunities for insurers. With these technological developments, auto insurance distribution platforms are expected to enhance productivity for providing coverage seamlessly at the point-of-purchase. 

Moreover, digital transformation enables auto insurance companies to create highly personalized user experiences to their customers. Furthermore, owing to social distancing, claim resolutions rely more on digital technologies such as photo estimating tools and mobile telematics solutions. Thus, implementation of these technologies is expected to offer remunerative lucrative opportunities for the insures.

Auto Insurance Market
By Region
2027
North America 
Europe
Asia-Pacific
LAMEA

Asia-Pacific would exhibit the highest CAGR of 10.2% during 2020-2027.

Key Benefits For Stakeholders 

  • The study provides an in-depth analysis of the global auto insurance market share along with the current trends and future estimations to elucidate the imminent investment pockets.
  • Information about key drivers, restraints, and opportunities and their impact analysis on the global auto insurance market size is provided in the report.
  • Porter’s five forces analysis illustrates the potency of the buyers and suppliers operating in the auto insurance industry.
  • The quantitative analysis of the market from 2019 to 2027 is provided to determine the market potential.

Auto Insurance Market Report Highlights

Aspects Details
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By Coverage
  • THIRD PARTY LIABILITY COVERAGE
  • COLLISION/COMPREHENSIVE/ OTHER OPTIONAL COVERAGES
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By Distribution Channel
  • Insurance Agents/Brokers
  • Direct Response
  • Banks
  • Others
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By Vehicle Age
  • New Vehicles
  • Used Vehicles
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By Application
  • Personal
  • Commercial
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By Region
  • North America  (U.S., Canada)
  • Europe  (Germany, UK, France, Italy, Spain, Belgium, Rest of Europe)
  • Asia-Pacific  (China, Japan, India, Australia, South Korea, Rest of Asia-Pacific)
  • LAMEA  (Latin America, Middle East, Africa)
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Key Market Players

AUTOMOBILE INSURANCE, PEOPLE’S INSURANCE COMPANY OF CHINA, PING AN INSURANCE (GROUP) COMPANY OF CHINA, LTD., ADMIRAL GROUP PLC, BERKSHIRE HATHAWAY INC., STATE FARM MUTUAL, ALLIANZ, CHINA PACIFIC INSURANCE CO., ALLSTATE INSURANCE COMPANY, TOKIO MARINE GROUP, GEICO

Analyst Review

Insurance industry plays a major role in economic growth by providing financial protection to individuals, assets, and businesses against uncertain events. Hence, the business of insurance has become a massive contributor toward the development of a country. However, the auto insurance industry has been largely affected due to the outbreak of the COVID-19 pandemic leading to economic instability. Almost 40% of trips have been decreased, usage of public transportation for commuting to work reduced to 0%, and total distance of short trips has increased. All these factors reduce the need for car insurance and drops the number of claims nearby to 50%, which is profitable for car insurance companies in short term only. However, in long term, it is likely to severely hit the market growth, owing to travel restrictions and less usage of cars, which imposes consumers not to take extra burden of premiums.

Increase in economic strength of the developing nations such as China and India is expected to provide lucrative opportunities for the market growth. North America occupied a major share in the auto insurance market in 2019, owing to the presence of major market players such as Allstate and Liberty Mutual. They are offering advanced coverages such as comprehensive, underinsured, and uninsured motorist due to the extensive adoption of cars. Furthermore, technological advances such as telematics, including black box, navigation & direction, OBD2 devices, and other connected devices in vehicles propel the growth of the market, by giving an opportunity to auto insurance companies to provide products linked to in-vehicle telematics along  with the liability coverage. Moreover, emerging countries in Asia-Pacific and Latin America are projected to offer significant growth opportunities during the forecast period. The global players are focusing toward product development and increasing their geographical presence, owing to increase in competition among local vendors, in terms of features, quality, and price.

Author Name(s) : Pramod Borasi| Monica Chhabra | Onkar Sumant

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Auto Insurance Market

Global Opportunity Analysis and Industry Forecast, 2020-2027