India Car Insurance Market Getting on To the Magnanimous Mode: Projected to Grow at a CAGR of 8.0% during 2022-2028 | BlueWeave


Delhi, NCR, Jan. 19, 2022 (GLOBE NEWSWIRE) — India car insurance market is growing at a high CAGR because of the increasing private car ownership, along with the growing popularity of cab services in the country. A favorable government policy requiring vehicle insurance for vehicles running in public places also contributes to the market’s growth…

A recent study, conducted by the strategic consulting and market research firm BlueWeave Consulting, revealed that the India car insurance market is estimated to grow at a CAGR of 8.0% during the forecast period (2022-2028). India’s car insurance market is one of the fastest-growing in the world due to the growing number of private automobiles as well as the flourishing taxi industry in the country. In addition, government policies that make it mandatory for vehicles running in public places to have car insurance also play an important role in driving the Indian car insurance market. Furthermore, the growing adoption of InsurTech and digitization in the insurance sector, combined with partnerships between car companies and financial service providers to expand insurance’s accessibility among the general population, is expected to present lucrative growth prospects to the country’s car insurance market during the forecast period.

Growing Financial Literacy in India Favoring Car Insurance Adoption in the Country

Sadly, in the past several decades, car insurance companies have been losing money due to the lack of adequate resources to educate the public about the benefits of car insurance. However, with the increasing penetration of smartphones and easy access to information through Google, consumers are becoming more knowledgeable about financial jargons. These internet resources are used by the younger demographic to search and compare the best car insurance policies for their own benefit, which will drive the market growth during the forecast period.

Increasing Adoption of Insurtech is Anticipated to Drive the India Car Insurance Market During the Forecast Period

The growing digitization and increasing adoption of Insurtech are providing lucrative growth opportunities to the India car insurance market. Insurance companies across India are currently implementing advanced technologies to increase consumers’ access to insurance policies. They are establishing partnerships with financial service providers to implement technologies, such as artificial intelligence, the internet of things, and blockchain into their operations. For instance, in November 2021, PhonePe and Liberty General Insurance announced a partnership to offer motor insurance digitally.

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High Customer Acquisition Cost and Growing Administration Expenses are Expected to Hamper the Growth of the India Car Insurance Market

The car insurance companies in India are stuck between high customer acquisition and consistently rising administration expenses. Car insurance companies, such as ICICI Lombard General Insurance and New India Assurance have reported losses in their motor insurance segment in the recent years. ICICI Lombard General Insurance announced in February 2021 that its customer acquisition cost have led to a growing expense management ratio, which rose to 26.6% in FY20 from 21.6% in the year ago.

Moreover, the government-backed accident protection scheme Pradhan Mantri Suraksha Bima Yojana is also a loss-making proposition for general insurers with losses exceeding 200%. This means that for every INR 100 collected as premiums, the companies are paying INR 200 out as claims. Furthermore, India Insurance Consumer Study states that administration expenses and customer acquisition contribute to around one-third of the expenses in motor insurance. Therefore, the high customer acquisition cost and administration expenses are expected to hamper the growth of the India car insurance market during the forecast period.

India Car Insurance Market – By Application

Based on applications, the India car insurance market is grouped into commercial and personal segments. Personal auto insurance accounts for the largest share of the market because of the requirement by law to have a vehicle insured under the Motor Vehicle Act of 1988. In addition to an increase in disposable income and private vehicle ownership, there is expected to be a boost in the personal car insurance segment over the next few years. However, the commercial segment is expected to grow at the fastest rate during the forecast period due to the emergence of cab services, such as Ola Cabs and Uber.

India Car Insurance Market – Regional Insights

Geographically, the India car insurance market is segmented into North India, South India, East India, and West India. Among these regions, South India dominates the India car insurance market. Despite this, North India is also emerging as a potential region for the market due to its size and untapped potential. While Tamil Nadu in Southern region of India tops the rank of highest road accidents in the country, Uttar Pradesh in North India reports the highest number of deaths owing to road accidents. As a result, car owners are increasingly opting for car insurance to protect themselves from financial losses.

Impact of COVID-19 on India Car Insurance Market

The growth of the India car insurance market was initially negatively impacted by the sudden outbreak of the COVID-19 pandemic in the country. As a result of mobility restrictions and declining purchasing power of customers, sales of private and commercial cars dropped significantly. Due to safety concerns and social distancing issues, the market is expected to flourish in the post-COVID-19 period as the demand for private vehicles is expected to surge. With Lamborghini luxury car sales jumping by 86% in 2021, India’s car sales have rebounded spectacularly in 2021. Tata, Suzuki, Hyundai, Honda, and all other major car manufacturers have also reported significant increases in car sales in 2020. Furthermore, Insurtech and financial services such as Paytm and PhonePe allow easy access to car insurance through company websites and financial institutions, which is proving beneficial to the car insurance market.

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India Car Insurance Market – Competitive Landscape

The leading players in the India car insurance market are Bajaj Allianz Car Insurance, Chola MS Car Insurance, Bharti AXA Car Insurance, Digit Car Insurance, Edelweiss Car Insurance, Future Generali Car Insurance, Kotak Mahindra Car Insurance, Liberty Car Insurance, Reliance Car Insurance, SBI Car Insurance, Tata AIG Car Insurance, and other prominent players.

The market is highly fragmented due to the presence of leading and established industry players. The car insurance companies in India offer various types of policies to suit customers’ needs and diversify their consumer base. They also offer their policies at different premium rates to target different income groups in India, thereby boosting their sales and revenue. Furthermore, the insurance companies also adopt various organic and inorganic market strategies, such as partnerships, collaborations, and joint ventures, along with advertisement and marketing to expand their market presence.

Recent Developments

In December 2021, Liberty General Insurance, one of the private sector General Insurance companies in India, entered into a partnership with CSC e-Governance Services India under the Ministry of Electronics and Information Technology (MeitY), Government of India. Through this agreement Liberty will further strengthen its presence in rural area and will initially offer Motor Insurance products – Two-Wheeler, Private Car and Commercial Vehicle to the customers.

In August 2021, Madras High Court ruled that “bumper-to-bumper” insurance should be mandatory whenever a new vehicle is sold, from September 1, 2021. This should be in addition to covering the driver, passengers and owner of the vehicle, for a period of five years. Additionally, the judge stated that this order will not preclude the claimants from suing the owner of the car for compensation for the death of the deceased, in accordance with the policy for which the car was insured.

Don’t miss the business opportunity of India car insurance market. Consult our analysts to gain crucial insights and facilitate your business growth.

The in-depth analysis of the report provides information about growth potential, upcoming trends, and statistics of India car insurance market. It also highlights the factors driving forecasts of total market size. The report promises to provide recent technology trends of India car insurance market and industry insights to help decision-makers make sound strategic decisions. Furthermore, the report also analyses the growth drivers, challenges, and competitive dynamics of the market.

Scope of the Report

Attributes Details
Years Considered Historical data – 2018-2021
Base Year – 2021
Forecast – 2022 – 2028
Facts Covered Revenue in USD Billion
Market Coverage North India, South India, East India, West India
Product Service/Segmentation By Type, By Application, By Region 
Key Players Bajaj Allianz Car Insurance, Chola MS Car Insurance, Bharti AXA Car Insurance, Digit Car Insurance, Edelweiss Car Insurance, Future Generali Car Insurance, Kotak Mahindra Car Insurance, Liberty Car Insurance, Reliance Car Insurance, SBI Car Insurance, Tata AIG Car Insurance, and other prominent players.

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