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Auto Insurance Industry: Complete Sector Overview

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Global Motor Insurance

A motor insurance policy covers the policyholder against the cost of accidental damage to a third party's property or to the third parties themselves; it may also cover damage to the insured’s vehicle in the event of an accident, theft, or fire.

The gross premium of the global vehicle insurance industry is over $800bn. Some of the big players in this industry include Allianz Group, American International Group, Berkshire Hathaway, Ping An Insurance (Group) Company of China and Allstate (whose success is closely linked to the amount of road accidents).

Key challenges for the sector include fraudulent motor claims, a drop in premium prices due to fewer accidents in some mature markets and increased competition from direct channels.

Key Segments

Broadly, at the global level, there are two types of motor insurance, based on the type of cover – third party only insurance and fully comprehensive insurance.

Third Party Only insurance is a mandatory policy issued by an insurance company to protect the general public from any accident that might take place on the road. This type of insurance is the minimum car insurance required by law in many countries.

Fully comprehensive car insurance policies offer additional cover for damage to the insured’s vehicle in the event of an accident, theft or fire.  Most fully comprehensive insurance also offers cover for belongings, windscreen cover, medical expenses etc.  

Another important classification distinguishes personal from commercial motor insurance.

Personal car insurance policies are written specifically for individuals.

A commercial vehicle insurance policy is needed for any company that uses commercial trucks, vans or automobiles for business. A commercial policy is in the company’s name and can specify which employees are covered when driving the vehicle or give blanket coverage for all employees.

The personal segment is the larger part of the market, with total gross premium income of over $565bn, equivalent to about 70% of the total.

Regional Market Shares

The key geographies for the global motor insurance market include the U.S., UK, Germany, France, Italy, Spain, Japan and China.

In the U.S., personal automobile insurance, with a premium volume of over $170bn, is mandatory in most states. The top five insurers control more than 50% and the top ten more than 70% of U.S. personal auto insurance.  The top five U.S. players are State Farm Group, Berkshire Hathaway Insurance, Allstate Insurance Group, Progressive Insurance Group and Farmers Insurance Group.

According to Insurance Europe, total motor premiums in Europe are around $150bn, equal to about 30% of the region’s overall non-life insurance market. The top five markets in the region are Germany, Italy, the UK and France, each of which represents about 15% of the region’s premiums, plus Spain, which represents about 8%.

Asia’s motor insurance market is large and growing. In Japan, motor insurance dominates the nonlife sector, accounting for about 65% of the market. According to Market Line, the Japanese market generates gross premiums of over $65bn. China’s motor insurance market is worth $32bn, equal to over 70% of the country’s property and  casualty market. Other Asian emerging markets have grown significantly as the middle class—and with it car sales— continues to expand. 

In Africa, compulsory third-party liability motor insurance has been introduced in big markets such as Kenya. In South Africa, although motor insurance makes up about 45% of the insurance industry’s gross underwritten premiums, affordable comprehensive insurance is still not currently sustainable.

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