Motor Insurance Market - Global Industry Size, Share, Trends, Opportunity, and Forecast, 2021-2031

The Global Motor Insurance Market to expand from USD 982.67 Billion in 2025 to USD 1.60 trillion by 2031 at a CAGR of 8.56%. The Global Motor Insurance Market serves as a crucial financial safety net for vehicle owners, covering losses from accidents, theft, and natural disasters, alongside third-party liabilities. The sector’s growth is primarily underpinned by stringent government regulations requiring mandatory liability coverage, ensuring steady demand across most regions. Furthermore, the persistent rise in global vehicle ownership and the continued development of the automotive industry significantly increase the volume of insurable assets, driving consistent market progress independent of technological advancements.

However, the industry faces substantial hurdles, as highlighted by the Association of British Insurers, which reported a record £11.7 billion in claim payouts in 2024 due to escalating theft rates and repair expenses. This data points to a major challenge impeding growth: the increasing severity of claims resulting from inflationary pressures and the high cost of repairing technologically complex vehicles. These rising expenses threaten underwriting margins and force insurers to adjust premiums, which may reduce affordability for price-sensitive consumers.

Market Drivers

The rapid adoption of electric and hybrid vehicles is a transformative force reshaping the industry by modifying risk profiles and claims structures. As the push for sustainable mobility grows, the influx of these advanced vehicles compels insurers to adjust underwriting models to address higher repair severities. Electric vehicles (EVs) often require specialized labor and components, resulting in repair costs that exceed those of traditional combustion engines. Data from CCC Intelligent Solutions in April 2025 indicated that EV repair labor rates were approximately 30% higher in 2024, a gap that squeezes margins and necessitates premium hikes. This increase in asset value and repair expense has fueled broader market expansion, with Allianz Research noting a 7.7% rise in global property and casualty premiums in 2024, partly due to the evolving needs of this modern fleet.

Concurrent with vehicle evolution, the integration of telematics and usage-based insurance (UBI) is revolutionizing the market by transitioning pricing from static indicators to real-time behavioral data. Insurers utilize these tools to offer personalized rates that reward safe driving, attracting lower-risk policyholders and decreasing claim frequency. This technology acts as a vital buffer against rising costs by actively promoting safer road habits. For example, Cambridge Mobile Telematics reported in April 2025 that distracted driving incidents dropped by 8.6% in 2024, a decline attributed to the incentives provided by telematics programs. This data-centric approach enhances customer engagement and equips insurers with detailed insights to better manage risk in a fluctuating economy.

Market Challenges

A primary obstacle hindering the Global Motor Insurance Market is the intensifying severity of claims, driven by inflation and the steep costs associated with repairing high-tech vehicles. As modern cars increasingly feature complex sensors and advanced driver-assistance systems, the expense to repair even minor damage has surged disproportionately. This rapid escalation in costs erodes underwriting profitability, forcing insurers to absorb payouts that frequently outpace premium income. To preserve financial stability, carriers are often compelled to raise rates significantly, which diminishes affordability for the average consumer and limits the expansion of the addressable market.

According to the Insurance Information Institute, personal auto claim severity accelerated drastically in 2025, with the compound annual growth rate nearly tripling to 10.9 percent between 2019 and 2024. This statistic underscores the profound financial strain on the industry, where the rising cost per claim exceeds the pace of standard rate adjustments. Such economic pressure forces insurers to implement pricing corrections that may lead price-conscious policyholders to reduce coverage limits or decline optional policies, thereby dampening the sector's overall growth trajectory.

Market Trends

The deployment of Artificial Intelligence for automated claims processing is fundamentally changing the operational landscape by substituting manual reviews with algorithmic decision-making. Insurers are leveraging computer vision and machine learning to evaluate damage via images, verify coverage, and expedite payments, significantly reducing administrative costs and settlement times. This shift improves customer satisfaction through speed and enhances underwriting accuracy by identifying patterns often missed by human review. For instance, a March 2025 TradingView article noted that Lemonade achieved a 12 percentage point year-over-year improvement in its Q4 2024 gross loss ratio, a result largely attributed to the efficiency of its AI-driven systems.

Simultaneously, the rise of embedded insurance models through automotive OEMs is disrupting traditional distribution channels by integrating coverage directly into the vehicle purchase process. Manufacturers are using their access to vehicle data and point-of-sale interactions to offer seamless policy bundles that bypass intermediaries and simplify buying for consumers. This model meets the modern driver's demand for convenience, transforming dealerships and digital platforms into key sales avenues. A Dig-In article from January 2025 revealed that 84% of Millennial and Gen Z consumers prefer having insurance options included with their vehicle purchase, indicating a significant generational shift toward these integrated solutions.

Key Players Profiled in the Motor Insurance Market

• Allianz SE
• Assicurazioni Generali
• Bajaj Finserv
• PICC Property & Casualty Co Ltd.
• AXA SA
• GEICO
• AllState
• Ping An Insurance
• State Farm
• Zurich AG

Report Scope

In this report, the Global Motor Insurance Market has been segmented into the following categories:

Motor Insurance Market, by Vehicle Type:

• New Vehicles
• Old Vehicles

Motor Insurance Market, by User:

• Personal Motor Insurance
• Commercial Motor Insurance

Motor Insurance Market, by Policy Type:

• Third Party Motor Insurance
• Fire & Theft Motor Insurance
• Comprehensive Motor Insurance

Motor Insurance Market, by Provider:

• Insurance Companies
• Insurance Agents/Brokers
• Others (Insurtech Companies
• etc.)

Motor Insurance Market, by Region:

• North America
• Europe
• Asia-Pacific
• South America
• Middle East & Africa

Competitive Landscape

Company Profiles: Detailed analysis of the major companies present in the Global Motor Insurance Market.

Available Customization

The analyst offers customization according to your specific needs. The following customization options are available for the report:

• Detailed analysis and profiling of additional market players (up to five).

This product will be delivered within 1-3 business days.