Fire Insurance Market

Market Overview

The global fire insurance market was valued at USD 73.20 billion in 2023 and is expected to grow at a CAGR of 10.5%, reaching USD 162.71 billion by 2032. The growth of the market is attributed to increasing awareness of fire risks and urbanization and infrastructure development.

Like property insurance, fire insurance pays for damage to property and other losses caused by fire. It covers not only the cost of fixing or replacing damaged items in the home but also the cost of a place to stay for people whose homes are empty or in bad shape. Fire insurance is a type of insurance that protects your home and most of your belongings from fire and natural disasters like forest fires, thunderstorms, and other things.

The major things that drive the growth of the global fire insurance market are the rise in the number of properties and the rise in the number of people who want to buy insurance policies. Also, people do not know much about fire insurance policies, and high premiums slow the growth of the market. During the forecast period, the market is also expected to grow thanks to the use of new technologies in existing products and services and government efforts to improve fire insurance policies.

Market Dynamics

Market Drivers

• Rise in the Need for Financial Safety Due to Increasing Uncertainties Driving Market Growth

As the number of people who need fire insurance for things like lightning, explosions, plane damage, riots, strikes, and intentional damage goes up, insurance companies are put under more pressure to invest in and create new products that are less common, have high coverage, and give people financial security in case of destruction, replacement, or any other damage.

In the past few years, there have been more accidents, such as typhoons, storms, cyclones, and tornadoes. This has made fire insurance more important. Most businesses and homeowners rely on fire insurance to protect them from future financial losses caused by things like damage to goods, property, and home contents. Insurance companies have added more types of coverage to their products to make them easier to use and to stay ahead of their competitors in the market in the coming years.

Consumers are buying more fire insurance because there are more homes and more risks, like wildfires, floods, earthquakes, and other disasters. Protection of purchased assets is also a big reason for the rise in demand for new commercial models and brand-name equipment around the world. The people who buy insurance policies need fire insurance to protect their homes and businesses. So, they look at the different policies and buy the one that meets their needs. Due to this, more people know about fire insurance policies, and the market is growing with policies being bought by consumers.

Market Restraints:

• Lack of Awareness Regarding the Fire Insurance Policies a Major Barrier in the Growth of the Fire Insurance Market

The fire insurance market cannot grow as fast as it could because people do not know enough about fire insurance coverage. Consumer experiences and taking out fire insurance are two of the most important things that need to be taken care of. This can be done by filling in the gaps in the market's knowledge of fire insurance. The Insurance Information Institute did a survey and found that 49% of the people who answered did not know that their fire policy covered natural disasters or average clauses. Also, the growth of the market is slowed by things like customers being misled about premium rates and the lack of knowledge about home insurance in developing Asia-Pacific countries, among other things.

Market Opportunities: 

• Implementation of Technologies in the Existing Products and Service Lines and the Government Initiatives Regarding Fire Insurance Policies Create Huge Opportunities in the Global Market

More insurance service providers are using advanced technologies like geo-location, fire alarm alerts, fire safety detection, fire skeleton protection, artificial intelligence (AI), Bluetooth fingerprint, blockchain, and big data. This gives insurers in the market new ways to do business. With these advances in technology, fire distribution platforms should be able to offer more coverages, like average policy, consequential loss policy, declaration policy, and others, more quickly and easily at the point of sale. 

Also, digital transformation makes it possible for fire insurance companies to give their customers very personalized user experiences. Also, to keep their place in the market, insurers are thinking about using big data analytics, which could help them charge high premiums. Also, technologies help collect data to meet the needs of each customer, calculate risk, and find fraud. So, technological advances that make fire insurance easier to get and more convenient to use are likely to create good business opportunities for insurers in the market.

• Government Initiatives Regarding Fire Insurance Policies Opens Doors of Progress in the Fire Insurance Market

Several government agencies are taking big steps to improve fire insurance policies and give customers access to a wide range of insurance options. Also, the government offers different fire insurance plans, which help the insurance industry sell insurance policies that make money and pay out claims. For example, all general insurers who sell fire and allied-perils insurance have to offer three standard products like Bharat Griha Raksha, Bharat Sookshma Udyam Suraksha, and Bharat Laghu Udyam Suraksha.

These products were designed by the Insurance Regulatory and Development Authority of India (IRDAI) to cover the risks of homes and micro and small businesses. So, these government initiatives are likely to give the market a good chances to make money in the coming years.

Regional Analysis

The global fire insurance market share is primarily segmented into three regions, namely North America, Europe and Asia-Pacific, out of which the North American region dominates the global market.

North America

The U.S. and Canada both are studied in the North American region. Fire insurance is a growing business because the government is making it easier for people to get it, and more people are becoming aware of its benefits. Also, people in this area are more likely to get fire insurance because lightning strikes, explosions, accidents, injuries, and damage to other people's property are becoming more common, which is why the region is growing at a CAGR of 11.2% over the forecast period.

Europe

The fire insurance markets in Europe are studied across Germany, the United Kingdom, France, Italy, Spain, the Netherlands, and the rest of Europe. From 2020 to 2021, the number of people in Germany who bought fire insurance kept going up. This was because more people wanted homes and buildings with more advanced features. Also, an increase in the per capita income, a rise in the standard of living, and a rise in the use of smart technologies like AI, blockchain, and V2X communication technology, which can be used too much and cause fires, are expected to help the market grow in the region. With all these things, the European region is anticipated to reach a market value of USD 54.20 billion in 2032 at a CAGR of 11.2%.

Asia-Pacific

China, Japan, India, Australia, South Korea, and the rest of Asia-Pacific are all looked at as parts of the Asia-Pacific market. Due to the presence of emerging economies, a large population base, and a rise in the disposable income of middle-class people, this area has the highest growth rate.

The main thing that makes the fire insurance market in the Asia-Pacific region grow is the rise in building and real estate projects. Also, the International Fire Safety (IFS) Standards in Asia focus on making rules that encourage more investment in infrastructure and make minimum levels of fire safety more consistent by setting specific standards. This gives the market in this region a lot of good chances to grow.

Segmental Analysis

The global fire insurance market share is segmented by coverage and by enterprise size.

By Coverage

The market is further divided into two types, viz. standard coverage and optional coverage, out of which the standard coverage owes the maximum share of the market.

• Standard Coverage

Standard coverage is an agreement between the policyholder and the insurance company to pay for all of the property damage and losses caused by a fire. Accidental fires can happen anywhere and at any time because of things like a fire starting, an explosion, or the water tank bursting. Such accidents cause damage and put the policyholder's finances at risk, which makes it even more important for people to have standard coverage. 

Standard fire insurance is a type of property coverage that is usually part of a homeowner's policy. It protects against damage to property caused by fire. Thus, it is the dominant segment in the by- coverage segmentation which is said to grow at a CAGR of 11.3%.

• Optional Coverage

There are different kinds of optional coverage, like a comprehensive policy, a replacement policy, a specific policy, and others. Comprehensive insurance is a type of coverage that helps people pay to replace or fix their home's belongings if they are stolen or damaged in an accident. Damages caused by fire, vandalism, or natural disasters are covered by full coverage. It is required for both homes that are rented and homes that are being paid for with a loan. For the most protection, all-inclusive policies cover both the building and its contents.

By Enterprise Size

The market is divided into Large Enterprises and SME’s, where the Large Enterprises has the major market share.

• Large Enterprises

Large businesses that have more than 10,000 employees are looked at in this report. These businesses buy insurance to protect themselves from fire-related losses and damages. They also want coverage for maintenance and repairs of broken machines and equipment to improve the business while it is closed. This is called "business interruption coverage." Fire insurance covers these kinds of losses, as well as those caused by storms, earthquakes, break-ins, and floods, which is why most large enterprises opt for such fire insurance policies, which is expected to grow at a CAGR of 11.3%.

• SME’s

The growth of small businesses is a big part of why developing economies are getting stronger. Small and medium-sized businesses (SMEs) look for insurance policies that will help them recover from fire damage and keep their businesses going. This will help them grow in the long run. The market is growing because more small and medium-sized businesses are buying fire insurance to protect themselves financially in case of uncertainty and vulnerability in the form of a pandemic or natural disaster that could cause them to lose money.

Recent Developments

• In May 2022, Amica Insurance Company announced its new partnership with Rocket Mortgage to enter mortgage insurance.
• In June 2022, Allianz decided to sell majority stakes in the Russian operations to Interholding.
• In May 2022, Liberty Mutual Insurance decided to acquire Fetch’s Technology to acquire certain technological assets of the Insurance Portal Services.
• In June 2022, State Farm Mutual Automobile Insurance Company signs a tech deal with Snapchat for making some changes in the real-time messaging technology in the insurance industry.