VEHICLE INSURANCE MARKET SIZE AND SHARE ANALYSIS - GROWTH TRENDS AND FORECASTS (2024-2031)

Market Size and Trends

Global vehicle insurance market is estimated to be valued at US$ 993.88 billion in 2024 and is expected to reach US$ 1,729.64 billion by 2031, exhibiting a compound annual growth rate (CAGR) of 8.2% from 2024 to 2031.

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The market is expected to witness positive growth over the forecast period due  to factors such as rise in number of vehicles on road globally and mandatory insurance regulations. However, increasing adoption of autonomous vehicles and developments in car sharing business models may negatively impact growth of conventional private motor insurance business over the long term.

Increased Vehicle Ownership

With the rapid economic growth and rising disposable incomes, vehicle ownership has increased substantially over the past decade across both urban and rural areas. As people incomes increases, their ability to purchase vehicles also increases. Growing young population with higher spending power prefers to own personal vehicles for convenience and social status. Car loans and financing options provided by banks and non-banking financial institutions have also made vehicle purchase more affordable for middle-income groups. Higher vehicle ownership directly leads to a larger customer base for insurance companies as vehicle insurance is mandated by law. Even for two-wheelers and commercial vehicles, In industries where there's a lot of need for delivering goods and getting them to their final destination, the demand for insurance keeps increasing every year. As more private and commercial vehicles hit the road, both for businesses and personal use, the need for insurance keeps going up. This trend is expected to continue over the long run, providing a steady stream of demand for vehicle insurance in the country.

Market Concentration and Competitive Landscape

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As businesses grow and evolve, people become more aware of the importance of reducing risks. In the past decades, as highways and road infrastructure have expanded, accidents and associated financial losses have become more common. The costs of vehicle repair and medical care in case of accidents are increasingly burdensome for average households. At the same time, exposure to international practices and risk transfer mechanisms through media and social interactions has played a role in altering people's perception of risks. Moreover, strict enforcement of laws has made vehicle insurance compulsory for several vehicle categories. Together, these factors have pushed individuals and fleet operators to reconsider their approach and proactively insure themselves against unforeseen circumstances. Insurers also recognize changing risk appetites and launch new products tailored to customers' needs as well as different vehicle types. This evolution towards a more prudent approach to managing risks and costs will be a key driver that strengthens insurance demand in the near future.

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Global vehicle insurance market growth is driven by a growing number of vehicles on the road globally. Mandatory insurance regulations across many countries also boost the demand for insurance products. However, high premiums especially for young drivers act as a restraint for market growth. With increasing adoption of telematics and usage-based policies, opportunities exist for insurers to offer pay-as-you-drive options. Asia Pacific is expected to dominate the market in coming years supported by large vehicle populations in China and India. Growth in young demographics and rising incomes will contribute to new policy sales. Insurers must devise innovative products tailored for different customer segments to gain market share. Those offering bundled home and auto policies have an edge. Digitization of claims processing and policy purchase will enhance customer experience and engagement. Partnerships with automakers provide an opportunity to sell insurance at the point of vehicle purchase. Telematics presents the chance to collect driving data and transition to more customized premiums. Regulatory support for new entrants promoting competition spurs product innovation. Adoption of autonomous vehicles in the long run may impact insurance needs and alter business models. Overall, strategic focus on technology, customization and multiple distribution channels positions insurers well for future growth in this evolving market.

Market Challenges: Complexities of the Global Vehicle Insurance Market

Global vehicle insurance market faces various challenges. Rising repair and healthcare costs have increased claims expenses, squeezing underwriting profits. Intense competition has weakened premium rates. Changing customer preferences toward online purchases and usage-based policies present technological hurdles. Younger drivers now utilize many mobile technologies in ways that complicate risk assessment. Environmental concerns and autonomy also introduce uncertainties. Overall, shifting customer needs and rising costs threaten traditional business models.

Market Opportunities: Possibilities in the Evolving Vehicle Insurance Market

However, the market also presents opportunities. Innovations in telematics, data analytics, and smart driving technologies enable insurers to develop customized policies and services. Growing usage-based model has potential for addressing youthful risk more precisely. Strategic partnerships allow forming unique coverage plans. Furthermore, demographic changes and populations favoring alternatives to ownership may boost certain product lines if approached creatively. A flexible mindset can transform challenges to better serve evolving customer

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In terms of motor insurance type, third party segment is estimated to contribute the highest share of 61.7% in 2024 of the market owing to consumers' growing need for basic coverage requirements. Third party insurance offers the most inexpensive premiums as it only covers liability in case of damage to other vehicles and property during an accident. Many vehicle owners are choosing the lowest cost insurance options to meet their state's minimum liability requirements while keeping their own premium costs low. This has significantly boosted demand for third party policies over the years.

Third party plans are particularly popular among owners of older vehicles. These consumers are less concerned about insuring the resale value of their aging cars, so third party covers just their needs at an affordable price. Younger drivers also favor third party as it allows them to minimize insurance costs at a critical time when rates are highest due to lack of experience. For commercial fleets, third party is commonly selected for low value delivery and service vehicles where comprehensive coverage is not worth the extra premium outlay considering the vehicle's market value.

Rising fuel and maintenance expenses have heightened consumers' sensitivity to payment obligations. In this economic environment, insurers offering attractively priced third party packages witnessed strong customer acquisition while those relying primarily on own damage sales have struggled. Regulators also make third party coverage mandatory, ensuring this segment maintains its significant share of the overall motor insurance market.

Insights, By Application - The popularity of owning private vehicles is what drives the dominance of this sector.

In terms of application, personal vehicle segment is estimated to contribute the highest share of 54.2% in 2024 of the market owing to strong individual affection for private transportation. Cars provide freedom and convenience valued highly in modern lifestyles. For many families, owning at least one private car has become essential for commuting, school runs, shopping trips and leisure activities. This deep personal attachment to private vehicles translates directly into robust insurance demand.

In large cities, congested roads and limited public transport alternatives further reinforce the importance of car ownership. Urban populations commonly rely on their vehicles not just to reach offices, malls and schools, but also for day-to-day errands that would otherwise take far longer using other modes. Such heavy dependence on private transportation keeps insurance requirements for personal vehicles growing each year.

Moreover, accessible vehicle loans and increasing incomes have made car ownership achievable for many who couldn't afford it before. As more people move into the middle and upper-middle class, there's been a significant increase in their purchases of personal vehicles and the corresponding insurance policies. The growing popularity of SUVs and luxury cars also expands insurance spending attached to personal vehicles. Regulators require minimum liability coverage for all registered private automobiles, locking in solid underwriting volumes for this core market segment.

Insights, By Vehicle Age- The highest interest in coverage is sparked by new vehicle purchases.

In terms of vehicle age, new vehicle segment is estimated to contribute the highest share of 76.8% in 2024 of the market owing to buyers' strong motivation to fully protect their sizeable investments. The considerable costs attached to brand new automobiles drive heavy consumer interest in comprehensive own damage policies. These plans provide peace of mind should an accident damage or destroy a vehicle during the vulnerable early years before full depreciation sets in.

Major vehicle manufacturers also offer time-bound 'new car replacement' warranties, incentivizing customers to maintain full insurance till expiry. This protects the manufacturer from uncontrolled liability claims in case of total losses to recently sold cars. Such assurances from reputed brands have further encouraged new car owners to thoroughly insure their prized possessions. For financing institutions as well, comprehensive coverage lowers risk exposure on collateral used to secure large auto loans.

The higher resale values of new vehicles also make repair or replacement claims more worthwhile from an insurer's cost-benefit angle. Loss adjustments tend to be smoothly resolved without disputes when vehicles are fresh off the production line. All these factors have established new cars as the most lucrative segment in terms of underwriting appetite and policy pricing buoyancy. In the highly competitive auto insurance space, players routinely underwrite new car packages as valuable customer acquisition tools and revenue drivers.

Regional Insights

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North America has been the dominant region with 34.3% in 2024 in the global vehicle insurance market over the past decade. The large presence of major insurance providers and availability of different insurance options at competitive premiums have helped the U.S. and Canada capture significant market share. Car sales in the area continue to be robust due to consistent economic growth and increased ownership of vehicles per person. The presence of large fleets and the enforcement of mandatory insurance laws have helped maintain steady demand. Insurers in North America are embracing innovative technologies to enhance customer service and drive operational efficiencies. This has allowed them to contain costs and continue providing affordable coverage plans.

Asia Pacific has emerged as the fastest growing regional market for vehicle insurance. Rapid motorization led by increasing incomes and urbanization is translating to higher insurance penetration rates across developing nations. While developed countries such as Japan and Australia have mature insurance markets, the likes of China, India and Southeast Asia offer growth prospects. Their consumer base represents massive untapped potential given relatively low insurance ownership currently. Favorable policy changes aimed at strengthening transportation infrastructure and consumer protection are inducing greater awareness and adoption of risk transfer products. Insurance providers seeking to capitalize on Asia's promising economic rise have started intensifying their presence through strategic partnerships and localized offerings tailored for diverse customer segments.

Market Report Scope

Key Developments

• In July 2022, Bajaj Allianz is a prominent insurance provider in India. introduced a new insurance option called Pay As You Consume (PAYC), which is based on usage. They stated that they are the first to offer this type of insurance approved by the Insurance Regulatory and Development Authority of India (IRDAI), allowing advanced add-on insurance for motor vehicles.
• In May 2022, Liberty Mutual Insurance is a leading global insurance company headquartered in Boston, Massachusetts, USA. finalized the acquisition of technology assets from Insurance Portal Services (Fetch). This acquisition enabled Liberty to utilize the integrated features of insurance specifically tailored for the automotive sector.
• In August 2021, AXA S.A., a big insurance company, introduced STeP, a new digital system to make it easier for customers to handle their vehicle insurance claims. According to AXA, STeP has made it possible to inform clients about repair or salvage arrangements within just a few minutes.
• In May 2021, GEICO teamed up with an AI startup called Tractable to speed up its processes for handling auto insurance claims and repairs. Tractable has developed a special computer vision technique that has learned from millions of past claims. This AI can analyze vehicle damage from photos, similar to a human expert. GEICO aims to use Tractable's technology to assess estimates faster and more accurately, while also reducing administrative tasks.

*Definition: Vehicle insurance is a type of insurance that provides financial protection against losses associated with vehicle ownership and operation. It helps cover expenses related to damages to the insured vehicle itself like in accidents, theft or natural disasters. It may also provide liability protection by helping pay for damages to other vehicles or property in an accident for which the insured is deemed responsible. Vehicle insurance offers peace of mind to vehicle owners by protecting them financially in unforeseen circumstances.

Market Segmentation

• Motor Insurance Type Insights (Revenue, US$ BN, 2019 - 2031)
  • Own Damage  
  • Third Party       
• Application Insights (Revenue, US$ BN, 2019 - 2031)
  • Commercial Vehicle
  • Personal Vehicle
• Vehicle Age Insights (Revenue, US$ BN, 2019 - 2031)
  • New Vehicle
  • Old Vehicle
• Distribution Channel Insights (Revenue, US$ BN, 2019 - 2031)
  • Individual Agents
  • Brokers
  • Banks
  • Online
  • Other Distribution Channels
• Regional Insights (Revenue, US$ BN, 2019 - 2031)
  • North America
    • U.S.
    • Canada
  • Latin America
    • Brazil
    • Argentina
    • Mexico
    • Rest of Latin America
  • Europe
    • Germany
    • U.K.
    • France
    • Italy
    • Russia
    • Rest of Europe
  • Asia Pacific
    • China
    • India
    • Japan
    • Australia
    • South Korea
    • ASEAN
    • Rest of Asia Pacific
  • Middle East & Africa
    • GCC Countries
    • South Africa
    • Rest of Middle East & Africa
• Key Players Insights
  • 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