According to a recent report published by Allied Market Research, titled, “Auto Insurance Market by Coverage, Distribution Channel, Vehicle Age, and Application: Opportunity Analysis and Industry Forecast, 2020–2027,” the global auto insurance market size was valued at $739.30 billion in 2019, and is projected to reach $1,060.90 billion by 2027, growing at a CAGR of 8.5% from 2020 to 2027.
The global auto insurance market is experiencing significant growth, and is anticipated to grow considerably in next few years. Auto insurance is an insurance provided for cars, trucks, motorcycles, and other vehicles. The demand for auto insurance is increasing among consumers, as it ensures financial protection in the event of vehicle damage or theft. Along with financial protection of vehicle, it provides third-party liability coverage to insured person for causing injury, death, or property damage to other drivers, passengers, or pedestrians. Hence, having car insurance is a legal requirement and necessity with the right level of cover in many states.
Multiple financial benefits are associated with auto insurance to offset the cost of bodily injury to owner or others, lost wages due to injury, full settlement of insurance to nominee holder in case of death, and repairs made to the car’s damage caused in an accident. Thus, the auto insurance market exhibits high growth potential, as the number of road accidents is increasing in most of the countries across the globe.
Region wise, the auto insurance market share was dominated by North America in 2019, and is expected to retain its position during the forecast period. The major factor that drives the growth of the market in this region includes presence of major players such as Allstate and Liberty Mutual. However, Asia-Pacific is expected to witness significant growth rate during the forecast period, owing to increase in adoption of digital technologies across emerging countries and rapid increase in disposable income of the middle-class population.
The outbreak of COVID-19 has negatively impacted the growth of the global auto insurance industry. This is attributed to the fact that travel restrictions by several countries have reduced the kilometers and usage of vehicles on road, which influences policyholders to seek for bailouts, reduced premiums, and refund on premiums. This has led to insurers freezing sales of new coverages for auto insurance. Furthermore, auto insurance is obligatory in many states. However, owing to travel restrictions and fear of infection, the sale of cars has declined to more than 50%, which states a significant drop in auto insurance policies. This acts as a critical challenge faced by auto insurance providers. To rebound the insurance business, key players are introducing new strategies to enhance the customer experience and to improve their market share in the pandemic situation.
Key Findings Of The Study
- By coverage, the third party liability coverage segment accounted for the highest share in 2019.
- On the basis of distribution channel, the insurance agents/brokers generated the highest revenue in 2019.
- Depending on vehicle age, the used vehicles segment is anticipated to lead the auto insurance market trends during the forecast period.
- Region wise, Asia-Pacific is anticipated to exhibit substantial growth during the forecast period.
The key players profiled in the auto insurance market are People’s Insurance Company of China, China Pacific Insurance Co., Ping an Insurance (Group) Company of China, Ltd., State Farm Mutual Automobile Insurance, Berkshire Hathaway Inc., Admiral Group Plc, GEICO, Tokio Marine Group, Allianz, and Allstate Insurance Company. These players have adopted various strategies to increase their market penetration and strengthen their position in the industry.