Artificial Intelligence

Global Motor Insurance Market will be worth ~$939 Billion by 2027

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2 years ago

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Bangalore, Aug. 04, 2022 (GLOBE NEWSWIRE) — Report Summary

In 2022, Motor Insurance premium rates are soaring after the industry is back on track after the COVID pandemic.  After a decline in claim payments in 2020-2021 due to travel restrictions, the vehicle’s accident frequency and severity has started increasing again.

Supply Chain Issues and inflation of replacement parts have driven more costs to insurers which has resulted in a change in the premium of vehicle insurance. The premium trends in the global motor insurance market vary significantly across regions and countries.

By 2027, Asia (Ex-China) region will see strong growth in terms of volume due to an increase in sales of two-wheeler EVs as the market hasn’t matured yet.

The global motor insurance market is led by North American and Chinese companies like State Farm, which is the global leader in motor Insurance with a 5% market share, followed by Geico and PICC at  5% each respectively. The rise of Insurtech Startups is a notable trend and they have been augmenting premium collection by implementing artificial intelligence and machine learning.

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Key findings

  • The year 2021 saw electric cars sales hit 6.6M units more than tripling their market volume compared to 2019(2.2M units). EVs have lower operating costs and comparatively lesser parts prone to high volume replacement but due to higher sticker price,it is expected to be a major driver for the new insurance sales.
  • The North American Insurance companies rely on drivers’ past data of driving and rule violations for the insurance premiums. Typically good drivers get a lower premium quote than bad drivers substantially improving the profit margins.
  • Due to the resurgence of dormant insurers and the entry of new telematics and usage-based insurers, rates for commercial auto liability coverage are beginning to level out.
  • In Past 5 years, the average amount paid for damage to policyholders’ vehicles increased by 45 to 60 percent and the average paid to third parties for damage to their vehicles rose by 25 to 35 percent in U.K, Germany, Italy and France.

Market trends and opportunities

  • Since China implemented the comprehensive reform of auto insurance, consumers have generally benefited, especially in the passenger car market
  • In South Asian countries, the trend of rising insurance payouts per claim has long been underway due to moral hazard and dishonest behaviour related to third-party bodily injury claims, and the pandemic-induced shortages of car chips are poised to put more upward pressure on claims severity.
  • In Japan, Insurance premium income basically remained stagnant as automobile insurance claims declined due to customer self-restraint on outings.
  • Asian companies are accelerating their digitization efforts from before the pandemic, taking into account the efficiency of business and convenience for customers.
  • In UAE, car insurance claim rates have increased nearly 45 percent in recent months as compared to the months of Covid-19, now reaching levels similar to 2019 rates. This upward trend is expected to continue in the coming months.

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Competitive Landscape

  • The basic coverage with the lowest rates is provided by USAA, which has an average rate that is 35% less than the national average in the U.S.
  • Companies are improving their renewal service team, including their own direct sales channels, which fully reflects the lack of intermediaries and few intermediate links to expand their footprint.
  • Due to high inflation in the U.S, Insurers are planning to increase their auto insurance rates which will be subject to a ~5-7 % increase in total auto insurance written premiums.

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Companies Profiled

  • Allianz
  • Allstate Insurance
  • American International Group
  • Berkshire Hathaway Homestate
  • People’s Insurance Company of China
  • AXA
  • Zurich Insurance Group
  • Munich Re

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