Canadian Underwriter

Global auto insurance market sees 2.9% growth since 2010 to US$669.7 billion in 2014, more growth expected

September 21, 2015   by Canadian Underwriter

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The global market value of auto insurance premiums last year rose to US$669.7 billion in gross written premiums GWP) and is expected to continue growing in most countries up to 2018, notes a new report issued Monday by U.K.-based Finaccord.

While the global auto market saw a growth rate of 2.9% in real terms (adjusted for inflation) between US$548.0 billion in 2010 and 2014, the compound annual growth rate was 5.1%, notes a statement from Finaccord, a market research, publishing and consulting company specializing in financial services.

Overall growth in global auto insurance market expected

By line, Global Motor Insurance: Size, Segmentation and Forecast for the Worldwide Market shows that the worldwide market value broke down between US$460.1 billion in personal motor insurance premiums and US$209.6 billion in commercial motor insurance premiums. Canada is among the 40 countries covered in the report, which represent most of the global market (other countries accounted for 7.5% of global motor insurance premiums in 2014).

From 2010 to 2014, “personal motor insurance premiums increased as a proportion of the total in 14 of the 40 countries investigated, with commercial motor insurance premiums in the ascendancy in 18 and with no change in the relative proportions in eight,” Finnacord reports.

The breakdown between personal and commercial business varies substantially from country to country. Using Taiwan and the Philippines as an example of opposites, personal motor insurance premiums accounted for 81.2% of the total market in the former, but just 28.3% in the latter.

“For Taiwan, this was because it has an exceptionally large number of motorcycles in addition to a relatively high level of car ownership, while in the Philippines there are 1.8 commercial vehicles for every passenger car,” the statement notes.

David Parry, Finaccord’s managing consultant, reports the rise in personal motor insurance premiums has been especially marked in China. “This is a consequence of the rapid increase in car sales to individual customers there with the result that a market in which commercial motor insurance premiums were formerly dominant is now one in which personal motor insurance premiums account for the majority,” Parry explains.

Once national inflation rates have been accounted for, Parry notes the fastest-growing markets were those of Thailand, India and China, with respective real compound annual growth rates of 13.9%, 12.2% and 11.0%. Overall, the value of the market in the United States within the global total fell from 34.1% in 2010 to 31.9% in 2014, he says.

“At a respective US$213.9 billion, US$86.4 billion and US$46.0 billion in gross written premiums, the U.S., China and Japan were the world’s largest motor insurance markets in 2014”, Parry says. The markets that grew most rapidly between 2010 and 2014 were those of Argentina, India and Turkey with compound annual growth rates of 34.0%, 19.0% and 17.1%, respectively, he adds.

Looking ahead, the research indicates the global motor insurance market is likely to continue increasing at similar nominal and real compound annual growth rates between 2014 and 2018 as was the case between 2010 and 2014. Finaccord expects that the value will reach approximately US$819.2 billion by 2018, converting to US$756.0 billion when deflated in line with forecast inflation rates.

Parry notes the car insurance markets of China, the Philippines and Thailand are expected to expand most rapidly up to 2018, while real value is likely to decline in mature markets such as Italy and the United Kingdom. The Russian market may also contract as a result of economic difficulties.