Auto insurance provides drivers with financial protection in case of accidents or theft, making it a useful form of vehicle coverage. Due to stringent government regulations and rising car sales, this market holds considerable growth potential.
Mobility trends, customer expectations and digital transformation will influence legacy carriers to adapt quickly or risk being left behind in this rapidly developing industry.
Increase in demand for personal vehicles
The global auto insurance market is expected to experience steady expansion over its forecast period, driven by rising global vehicle ownership and disposable income levels, as well as an increased use of telematics technology in cars driving its expansion.
Asia-Pacific will experience the highest compound annual compound average growth during its forecast period, due to rapid smartphone usage and mobile connectivity proliferation as well as rapid expansion of internet of vehicles networks in countries like South Korea and China.
Automotive usage-based insurance (UBI) is growing quickly as more consumers search for lower premiums, registration savings and inexpensive extra services. Furthermore, UBI allows insurers to increase customer retention, profitability and streamline claims processes; better risk assessment/pricing by turning self-reported data into loss-correlated insights – this may fundamentally change how auto insurance is assessed, priced and sold.
Increase in road accidents
Since 2007, the global auto insurance market has seen substantial expansion. This trend can be attributed to both an increase in vehicle usage and demand for coverage; however, due to COVID-19 pandemic’s impact, growth of this sector has experienced some setbacks.
Still, the future of auto insurance looks bright. New ecosystem-based distribution models will present traditional insurers with challenges; those able to adapt quickly are likely to thrive in this ever-evolving market.
North America led the global auto insurance market in 2021 and is projected to remain its dominant region for at least the forecast period. This can be attributed to OEM partnerships with insurance and telematics technology providers and increasing popularity of mobility-as-a-service offerings. Automotive usage-based insurance is projected to experience rapid growth due to its ability to deliver accurate risk evaluation, premiums and policies.
Increase in number of telematics-equipped vehicles
Automobile telematics market is experiencing rapid expansion. This technology allows insurance companies to monitor and collect data on customer driving behavior as well as identify and reduce frauds. Many auto insurance businesses utilize this technology by installing an onboard device commonly known as black box into each car which records speed, braking patterns, road type travelled along with speed data for customized policies.
Many popular brand-name telematics programs fall under the “pay-as-you-drive (PAYD) and “pay-how-you-drive (PHYD) umbrellas, providing drivers with rewards for safe driving behavior and insurance providers using information collected by telematics devices to customize offerings to individual drivers based on their driving behavior. Consumer acceptance has grown over time as consumers become comfortable sharing driving data in exchange for discounted premiums; these factors should further propel growth of the insurance telematics market in future.
Increase in adoption of digital technology
Digitizing auto insurance market is propelling growth. By employing telematics to measure driver behavior and accurately predict risk and set premiums, insurers can assess driver risk more accurately while forgoing traditional factors like claims history and demographics that largely dictated rates in the past.
The global vehicle insurance market can be divided into passenger cars, light commercial vehicles and heavy commercial vehicles. In 2021, passenger car market growth was particularly strong due to consumers’ desire for lower insurance rates, significant registration discounts and extra services such as theft protection and remote vehicle management at affordable costs.
Insurance companies have become more engaged with OEMs to offer usage-based insurance (UBI) solutions using telematics technology for automotive customers. This trend will accelerate further as electric vehicles (EVs) increasingly replace internal-combustion engine cars (ICE).