APAC’s motor insurance industry premiums to reach $294.2b in 2025
Growing sales of electric vehicles supported the recovery of premiums in 2021.
The written premiums of the motor insurance industry in APAC is projected to reach $294.2b by 2025, according to a report data and analytics firm GlobalData.
GlobalData’s latest report on the global motor insurance market posits that APAC’s industry will expand at a compound annual growth rate (CAGR) or 5.4% over 2020-2025, supported by the recovery in new vehicle sales and product innovation in motor insurance.
APAC region’s motor insurance industry is expected to report a strong recovery with 5.1% growth in 2021, following a tepid 0.4% growth in 2020, said Kotu Keerthi Naimisha, insurance analyst at GlobalData. This is on the back of recovery in vehicle sales, new product development coupled with the easing of lockdown restrictions will support demand for motor insurance,
“Recovery in vehicle sales in 2021 is mainly driven by growing sales of electric vehicles (EV) as many economies aim to phase out internal combustion engine vehicles as part of their climate goals,” Naimisha said in the report. “For instance, Singapore aims to phase out diesel-powered vehicles by 2025, as a result, EV sales rose by over 80% during January–September 2021.”
Insurers are also notedly focusing on product innovation to drive sales, such as pay-as-you-go and short-term car insurance services. Both products have reportedly gained traction during the lockdown as demand for customized motor insurance surged, particularly from ride-share services providers such as Uber, Tada (South Korea), and Ola (India), Naimisha noted.
Amongst markets in APAC, China remains the largest motor insurance market in the region, accounting for 52.9% of the total APAC premiums in 2020.
China’s growing middle-income population and rising disposable income are key drivers for motor insurance growth, and insurance premiums in China are estimated to have grown by 5.7% in 2021, according to GlobalData.
Undergoing reforms–through which Chinese regulators aim to control premium prices and develop commercial motor insurance–will further support growth.
Japan, South Korea, Australia, and India count amongst the region’s top five markets, with a collective share of 39.9% of the premiums in 2020. Motor insurance premiums in these markets are expected to grow by 2.5%, 3.7%, 13.8%, and 3.2%, respectively, in 2021, according to GlobalData’s report.