GLOBAL MOTOR INSURANCE MARKET
- Premiums from motor insurance accounts for around 40% of total non-life insurance premiums in 2019. This is expected to increase in the next few years due to increasing demand from developing countries primarily Asia.
- InsurTech, which aims at changing insurance industry particularly motor insurance by leveraging new technologies is gaining momentum. Countries like Hong-Kong have launched projects to make Hong-Kong as the InsurTech hub in Asia
- The trends that are expected to change the landscape of the industry includes emergence of shared mobility, shift from personal to commercial ownership of cars, data overload, digitalisation and artificial intelligence.
Vehicle insurance (also known as car insurance, motor insurance or auto insurance) is insurance for cars, trucks, motorcycles, and other road vehicles. Its primary use is to provide financial protection against physical damage or bodily injury resulting from traffic collisions and against liability that could also arise from incidents in a vehicle.
Vehicle insurance may additionally offer financial protection against theft of the vehicle, and against damage to the vehicle sustained from events other than traffic collisions, such as keying, weather or natural disasters, and damage sustained by colliding with stationary objects.
GLOBAL MOTOR INSURANCE MARKET DYNAMICS
Digital ecosystem based on a mutual partnership, Internet of Things (IoT) and big data analytics are joining hands to reshape the global auto insurance industry.
With driving forces arising from both inside and outside the industry, general insurers who can rapidly and flexibly incorporate such emerging technologies in their operational strategies will win in this game changing marketplace.
Meanwhile, insurance regulators are also taking action to support this rising market trend by fostering a favourable regulatory environment for InsurTech.
InsurTech described as a transformational force which is pushed by innovative technology forward has disrupted the business models on which such companies operated.
Estimates indicate that around USD 200 Billion market value of auto insurance industry is at the brink of change due to new mobility, car technology, digitalisation and regulation. If such a disruption happens, it is expected that premiums in Japan would fall by 84% in 2040 as compared to 2015.
In addition, there would be a fundamental shift in personal ownership of cars to commercial ownership which would severely affect the industry in the coming decade.
As the ratio of personal to commercial ownership of cars increases, from 50/50 to 20/70 in 2030 resulting into the fall of the personal motor market by 35%, it invites for a product innovation on the part of insurers to ensure their survival and growth.
UPCOMING TRENDS IN MOTOR INSURANCE MARKET
The following trends are expected to change the scenario of the industry in the coming decade-
- Accident proof technology and the autonomous car
With increasing in-car safety features and emergence of autonomous cars as well as external technology which could lead to better accident analysis and safer driving through speed control, it reduces and shifts the shape of the risk pool. It is expected that such a disruption would progressively slow down growth in mature economics such as United Kingdom by as high as 10%.
- Shared mobility behaviours and models which are driven by the growth of the sharing economy and consumers switching to shared means of transport leading to new product developments such as Usage Based Insurance.
- Usage Based Insurance
Usage-based insurance (UBI), which is also referred to as pay-per-mile, pay-as-you-drive, or pay-as-you-go, is a type of auto insurance, in which the insurer can measure how far a vehicle is driven, where it’s driven, and how it’s driven.
UBI is generally powered by telematics technology that is pre-installed in a vehicle’s network or can be used through a plug-in device/mobile application. Telematics devices provide the insurers with a wide range of data, such as braking and accelerating, to measure the drivers’ behaviour and usage of the vehicle. Based on the collected data, the insurers calculate the insurance premium for that particular policy. As par estimates, around 20% of insurers in United States would offer such insurance in next five years.
- Increase in data
Insurers using data is not new but new sources of data come from connected cars, smartphones and apps. Such big data is changing the way insurers need to collect and analyse data for designing products that meet customer satisfaction.
- World economics
Emerging markets are still seeing an increase in car penetration and miles driven, which may offset and overcome some of the pressures from technology on traditional motor insurers.
COMPARISON OF SHARE OF MOTOR INSURANCE MARKET IN OVERALL INSURANCE INDUSTRY
AUTO INSURANCE MARKET SIZE AND FORECAST
In case of Asia -Pacific region, particularly India, China, Singapore cases of usage of technology has been found which indicates insurer’s willingness and ambition to change how they engage with customers, price a product and deliver a vastly different experience for their customers. For example, in China, an auto insurance starts up is offering innovative quasi-insurance products such as “car wash subsidy” and “Traffic jam subsidy” in addition to additional auto insurance products.
The provider tracks the location of the user through an app which provides information if the customer is caught in a traffic jam and offers “gas coupons” to compensate for the same.
In India, increasing technology advancements leading to greater connected world and changing the way that the data is collected and processed has changed the local motor insurance industry.
Currently, auto insurance is bundled with the car purchase and is included in the “on road price” of the product. Once onboarded, insurers would be able to closely engage with customers and to ensure safe driving and prevent accidents.It is expected that such a move would result in win -win situation for both the parties as it would lead to reduction in the number of claims which account for 70-80 % of the premiums.
Regulatory support in Asia-Pacific region is also expected to boost growth in the region. For example, The Hong Kong Insurance Authority has initiated steps to promote Hong Kong as Insurtech hub in Asia. Two pilot projects have already been launched- Insurtech Sandbox and Fast Track which are aimed at creating a conducive environment for achieving the usage of such technologies in the industry.
The global motor insurance market is estimated at $XXB in 2020 growing at –% CAGR till 2025
GLOBAL MOTOR INSURANCE MARKET COMPETITIVE LANDSCAPE
All motor vehicle insurance companies are expected to change their systems and processes so that they can develop and accurately price new products and insurance packages. For this, motor vehicle insurance companies need to introduce new coverage and performance or usage-based insurance products. Also, vendors are also required to test large volumes of user data to offer competitive pricing to their end-users.
The leading vendors in the market are Allianz, Allstate Insurance, American International Group, Berkshire Hathaway Homestate, People’s Insurance Company of China, Ping an Insurance. Other prominent vendors in the market include AXA, Zurich Insurance Group, and Munich Re.
|2||Scope of the report|
|7||Insights from Industry stakeholders|
|8||Cost breakdown of Product by sub-components and average profit margin|
|9||Disruptive innovation in the Industry|
|10||Technology trends in the Industry|
|11||Consumer trends in the industry|
|12||Recent Production Milestones|
|13||Component Manufacturing in US, EU and China|
|14||COVID-19 impact on overall market|
|15||COVID-19 impact on Production of components|
|16||COVID-19 impact on Point of sale|
|17||Market Segmentation, Dynamics and Forecast by Geography, 2020-2025|
|18||Market Segmentation, Dynamics and Forecast by Product Type, 2020-2025|
|19||Market Segmentation, Dynamics and Forecast by Application, 2020-2025|
|20||Market Segmentation, Dynamics and Forecast by End use, 2020-2025|
|21||Product installation rate by OEM, 2020|
|22||Incline/Decline in Average B-2-B selling price in past 5 years|
|23||Competition from substitute products|
|24||Gross margin and average profitability of suppliers|
|25||New product development in past 12 months|
|26||M&A in past 12 months|
|27||Growth strategy of leading players|
|28||Market share of vendors, 2020|
|30||Unmet needs and opportunity for new suppliers|