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Auto Insurance Market

Auto Insurance Market: Information by Coverage (Third Party Liability Coverage), Distribution Channel (Direct Response, Banks), Vehicle Age (New Vehicle), and Region — Forecast till 2030

Published At : 12 Sep, 2022
Updated At : 13 Sep, 2022
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Market Snapshot
Base Year:
2021
Study Period:
2020-2030
CAGR:
8.7 %
Fastest Growing Market:
Asia Pacific
Largest Market:
North America

The global auto insurance market size was valued at USD 652.5 billion in 2021. It is expected to reach USD 1,383 billion by 2030, growing at a CAGR of 8.7% during the forecast period (2022-2030). Auto insurance is a contract that protects the insured against financial loss in the event of an accident or theft. It is a legal arrangement between the policyholder and the insurer. The insurance provider promises to cover the insured losses according to the terms of your policy in return for a premium. Customers are financially protected by auto insurance from physical damage brought on by traffic collisions and vehicle theft. Additionally, it covers the costs incurred when an insured owner of a vehicle causes injuries, fatalities, or property damage to another driver, vehicle, or third-party property like a building, fence, or utility pole. Although state-by-state auto insurance laws differ, many jurisdictions have necessitated bodily injury and property damage liability coverage before operating or maintaining a vehicle on public roadways. Given that there are more road incidents globally, the vehicle insurance market has significant development potential.

The primary driving forces behind the advancement of the worldwide auto insurance market are an increase in accidents, the implementation of strict government rules for purchasing auto insurance, and an increase in automotive sales globally due to a rise in consumer per capita income. Additionally, the introduction of driverless vehicles hampered the market's expansion. Furthermore, during the projection period, there could be attractive opportunities for market expansion due to the incorporation of technology into current product and service lines and the rise in demand for third-party liability coverage in emerging nations.

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Industry Dynamics

Global Auto Insurance Market Drivers

Growing Traffic Incidents and Regulatory Requirements 

The increase in demand for auto insurance for accidents such as traffic collisions, physical damage or bodily injury, theft, and fire has increased pressure on insurance companies to invest in and develop such products that have low growth, high coverage, and provide financial security in the form of medical injury or any other damages. Auto insurance has become necessary as a result of the rise in incidents in recent years, including traffic injuries, drunk driving, and distracted driving while speeding. Most car owners rely on their auto insurance to protect them from potential financial losses, including damage to other drivers, passengers, or pedestrians. 

Additionally, auto insurance includes such coverages, which aids in reimbursing the policyholder's beneficiaries in the event of their passing. Insurance providers have raised the number of coverages in their products to improve the user interface experience and stay ahead of their rivals in the market in the following years. Additionally, the federal and state governments made auto insurance required at the time of vehicle registration to protect customers against unfair prices projected to rise in the coming years and ensure that insurance businesses remain financially stable. This element boosts customer demand for auto insurance. 

According to the 1988 Motor Vehicle Act, all motor vehicle operators must carry auto insurance to cover the money they have already paid or are required by law to pay as damages for property loss or accidental death to third parties. The Motor Vehicle Act also altered the penalties for failure to possess a basic Compulsory Third-Party Policy, which brought a lot of uninsured automobiles into the insurance market along with mandatory coverage. As a result, the sales of auto insurance policies are boosted by such strict legal regulations, which helps the global market to expand.

Global Auto Insurance Market Restraints

Lack of Awareness Regarding Policies

A significant element limiting the growth of the auto insurance business is a lack of understanding and understanding regarding auto insurance coverages. According to the Insurance Information Bureau, only 6.5 to 7 crore of the roughly 18 crore registered cars on Indian roads has insurance. The main challenge that must be addressed by closing knowledge gaps for auto insurance is consumers' experiences with frequent traffic accidents and low adoption of auto insurance.

Global Auto Insurance Market Opportunities

Growing Demand for Auto Insurance Products & Services 

Auto insurance companies have a tremendous opportunity to grow their offerings in the market. Companies offer medical coverage, comprehensive coverage, bodily injury & property damage coverage, and third-party liability coverage. As a result, it is anticipated that insurers would have profitable chances to innovate and broaden their product offerings by incorporating particular coverages like a pay-as-you-drive policy. Instead of the typical number of miles a person travels in a year, this covers the miles driven by each individual. Additionally, because these coverages are offered in combination or bundled options, it is simple for customers to choose such plans that best suit their needs. In the coming years, the sum of all these elements will be anticipated to offer lucrative product expansion opportunities.

Segmental Analysis of Global Auto Insurance Market

The global auto insurance market is classified based on coverage, distribution channel, vehicle age, application, and region. 

By Coverage Analysis

As per coverage, the fragments are third-party liability coverage and collision/comprehensive/other optional coverage.

The third-party liability coverage section is predicted to grow at a CAGR of 7.57% and hold the largest share. A third-party liability insurance policy is bought to defend against third-party claims. Third-party coverage in motor insurance protects against claims of losses and damages sustained by uninsured drivers who are not covered by the insurance policy. The Motor Vehicles Act makes third-party liability insurance a compulsion. At the time of vehicle registration, new and used car owners are required, which is a significant element fueling the global market expansion.

The collision/comprehensive/other optional coverage section will hold the second-largest share. Customers who purchase comprehensive/collision/additional optional coverage insurance can use it to replace or repair their car if it is stolen or suffers damage in an accident. Damage resulting from a natural disaster, vandalism, or fire is covered by comprehensive coverage. In addition to the required third-party insurance, comprehensive coverage guards the car owner against financial losses brought on by theft or damage to the vehicle. Due to the complete protection, comprehensive insurance is far more expensive than a typical policy.

By Distribution Channel Analysis

Per the distribution channel, the fragments are insurance agents/brokers, direct response, banks, and others.

The direct response section is predicted to advance at a CAGR of 10.2% and hold the largest share. Direct response refers to selling insurance directly to consumers by telephone, television, direct mail, or other channels. Additionally, vehicle insurance businesses look into new distribution methods, concentrate on growing their clientele, and aim to maximize their investment potential. Numerous partnerships exist between auto insurance providers, brokers, online agents (OTAs), and banks. Through their intermediaries, insurers and underwriters distribute their products, allowing customers to acquire and buy products as quickly as possible.

The insurance agents/brokers segment will hold the second-largest share. A significant auto insurance market trend is using multiple websites and online selling platforms by insurance agents and brokers to meet the growing demand for individualized and customized services. Insurance brokers also buy insurance from various providers, discovering and organizing the best insurance plans for their clients using their extensive knowledge of risks and the insurance industry.

By Vehicle Age Analysis

Based on the vehicle age, the categories include new and used vehicles.

The new vehicle section is predicted to advance at a CAGR of 8.17% and hold the largest share. A new automobile has never been owned by anybody other than a distributor, dealer, or manufacturer and has never been registered on the market. Additionally, new vehicle owners must purchase long-term third-party auto insurance for cars valid for three or five years. Also, the manufacturer, distributor, or dealer offers a variety of advantages to customers who finance new vehicles because they have ties to numerous other market players.

The used vehicle section will hold the second-largest share. Some vital aspects supporting the global auto insurance market growth are the rise in demand for old automobiles with customized models, a limited budget for car insurance, and changes in company preferences toward vehicles. A car mainly excluded from the used vehicle category is sold as junk rather than an operating vehicle.

By Application Analysis

Based on the application, the categories include personal and commercial.

The personal section is predicted to advance at a CAGR of 8.4% and hold the largest market share. A motor vehicle classified as a personal vehicle seats no more than eight people, including the driver. Due to their high-cost effectiveness, improved comfort, and higher durability, these cars have seen significant market growth. The segment is expanding because consumer demand for personal automobiles is rising, and more passenger cars are being produced globally than commercial vehicles.

The commercial section will hold the second-largest share. Commercial vehicles can only move commodities or materials; they cannot transport people. Due to the frequent use of commercial vehicles in supply chain services across industry verticals and business start-ups, the demand for these vehicles is growing significantly. Additionally, many businesses use commercial cars to carry their personnel, necessitating the need for insurance for these vehicles that provides financial security against losses and damages.

Regional Analysis of the Global Auto Insurance Market

The region-wise segmentation of the global auto insurance market includes North America, Europe, Asia-Pacific, and LAMEA.

North America and the Asia Pacific are Anticipated to Lead the Regional Market

Auto Insurance Market Regional Analysis

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North America is envisioned to command the market while growing at a CAGR of 7.5%. Insurance sales are fueled by the population's rising disposable income in North America. The market is anticipated to increase due to technological developments and continued research & development efforts in autonomous vehicles and their security. The popularity of auto insurance in this region has also been prompted by a rise in traffic accidents, collisions, injuries, and property damage. The need for auto insurance is also expected to rise due to increased auto sales and government regulations requiring insurance for all vehicles, fueling the market's growth.

Major firms like Allstate and Liberty Mutual are present in the area, another factor in the region's expansion. These industry-leading businesses provide cutting-edge coverages like comprehensive, underinsured motorist, and uninsured motorist coverage, which further fuel market expansion. Additionally, the widespread use of autos in this region significantly aids the market's development. Furthermore, it is anticipated that introducing strict government laws about car safety will fuel industry expansion.

The Asia Pacific will likely hold USD 441 billion, growing at a CAGR of 10.4%. Due to rising economies, a sizable population base, and an increase in the disposable income of the middle-class population, the region has the fastest growth rate. Furthermore, it is anticipated that rising car sales and disposable income will fuel industry expansion. Auto insurance is also required in numerous other nations, including India. Additionally, it is more advantageous to protect one's finances in case of an accident or car damage. 

Additionally, as the number of wealthy people has grown, their purchasing power has grown for essentials like food and housing and optional items like motorcycles and cars, which has encouraged them to get auto insurance to safeguard their vehicles. Exports and domestic consumption in Asia are driving factors for the expansion of auto insurance.

Top Key Companies Profiled

List of key auto insurance market companies profiled

  • Allianz
  • Allstate Insurance Company
  • Admiral Group Plc
  • Berkshire Hathaway Inc.
  • CHINA PACIFIC INSURANCE CO.
  • GEICO
  • People's Insurance Company of China
  • Ping An Insurance (Group) Company of China, Ltd.
  • State Farm Mutual Automobile Insurance
  • Tokio Marine Group

Recent Developments

  • In 2022, Interholding LLC will acquire most of ALLIANZ GROUP's Russian operations.
  • In 2022, ALLIANZ GROUP announced that it had signed a strategic collaboration agreement with Voya Financial.

Global Auto Insurance Market: Segmentation

By Coverage

  • Third-Party Liability Coverage
  • Collision/Comprehensive/ Other Optional Coverage

By Distribution Channel

  • Insurance Agents/Brokers
  • Direct Response
  • Banks
  • Others 

By Vehicle Age

  • New Vehicle
  • Used Vehicle

By Application 

  • Personal
  • Commercial

By Region

  • North America
  • Europe
  • Asia-Pacific
  • LAMEA
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