April 18, 2024

Vehicle Insurance Market Is Estimated To Witness High Growth Owing To Rising Uptake Of Technology

The vehicle insurance market covers insurance policies for private and commercial vehicles against any financial loss or damage that may occur due to incidents during transit or usage. Vehicle insurance provides financial protection against losses incurred from accidents, damages to vehicle and claims from third parties against injury or property damage. The rising vehicle parc and number of road accidents have driven the demand for vehicle insurance. Moreover, mandatory requirements across several countries for vehicle owners to carry insurance policies have significantly boosted the market.

The global vehicle insurance market is estimated to be valued at US$ 1,729.64 Bn in 2024 and is expected to exhibit a CAGR of 8.2% over the forecast period 2024 to 2031.

Key Takeaways

Key players operating in the vehicle insurance are People’s Insurance Company of China, Allstate Insurance Company, China Pacific Insurance Co., Allianz, State Farm Mutual, Tokio Marine Group, Automobile Insurance, Geico, Ping An Insurance (Group) Company of China, Ltd., Admiral Group Plc, Berkshire Hathaway Inc., State Farm, Ping An Insurance, Zurich AG, AXA SA, Assicurazioni Generali, GEICO, Bajaj Finserv. The rising vehicle sales and road infrastructure development have opened new opportunities for market players to expand their businesses. Increasing adoption of telematics, AI and other technologies in insurance underwriting, risk assessment and claims management has significantly optimised the insurance value chain. Technology driven innovations like usage-based insurance, pay-as-you-drive covers and on-demand insurance have gained traction among customers.

Market drivers
Mandatory Vehicle Insurance Market Size regulations across major countries, Rising count of vehicles on-road due to increasing disposable income, surging road accidents and losses have driven the demand over the years. Technological advancements in telematics and data analytics have enabled risk assessment with higher accuracy and product customization. Increasing penetration of smartphones and connectivity solutions like internet of vehicles has facilitated online insurance purchases and claims management.

Current challenges in the vehicle insurance market:

The vehicle insurance market is facing several challenges currently. One of the major challenges is increasing insurance claims due to rising vehicle thefts and accidents. With more vehicles on the road, road accidents have increased significantly over the years, placing a bigger financial burden on insurers. Rapid urbanization and growing traffic congestion in major cities have further contributed to rising insurance claims. Another key challenge is increasing insurance premiums. Insurers are raising premiums to offset their rising costs, making insurance unaffordable for some customers. Intense competition is also pushing down profit margins for insurers. Technological disruptions from insurtech startups are threatening the traditional business models of insurers. Changing customer expectations of online purchases and instant claims processing are challenging insurers to innovate and adopt digital technologies.

SWOT Analysis
Strength: Growing demand for vehicles and motorization is driving the need for insurance. Insurers have large customer bases and distribution networks.
Weakness: Rapid rise in insurance claims is squeezing underwriting profits. High operating costs and commissions reduce margins.
Opportunity: Adoption of telematics and data analytics presents scope for customized policies and cost savings. Emerging markets in Asia and Africa offer huge growth potential.
Threats: Entry of technology companies and insurtech startups is increasing competition. Stringent regulations on premium rates can impact profits.

Geographical regions:
The vehicle insurance market in terms of value is highly concentrated in North America and Europe. Major markets include the United States, China, Japan, Germany, United Kingdom and France.

The Asia Pacific region is witnessing the fastest growth in the vehicle insurance market currently. Countries like India, Indonesia, Philippines, Thailand and Vietnam are exhibiting strong double-digit growth, driven by rising incomes, vehicle ownership and motorization rates. Government support for insurance penetration and mandatory purchase of motor insurance are fueling market expansion in emerging Asian economies.

1. Source: Coherent Market Insights, Public sources, Desk research
2. We have leveraged AI tools to mine information and compile it