Auto Insurance Market – Global Industry Size, Share, Trends, Opportunity, and Forecast, By Coverage (Third-Party Liability Coverage, Collision/Comprehensive/ Other Optional Coverage), By Vehicle Type (New Vehicle, Used Vehicle), By Provider (Insurance Companies, Insurance Agents/Brokers, Others), By Region & Competition, 2021-2031F

Forecast Period	2027-2031
Market Size (2025)	USD 981.01 Billion
CAGR (2026-2031)	8.62%
Fastest Growing Segment	Insurance Agents/Brokers
Largest Market	North America
Market Size (2031)	USD 1611.14 Billion

Market Overview

The Global Auto Insurance Market will grow from USD 981.01 Billion in 2025 to USD 1611.14 Billion by 2031 at a 8.62% CAGR. Auto insurance is a risk transfer mechanism whereby an insurer indemnifies a vehicle owner against financial losses arising from accidents, theft, or liability in exchange for premium payments. The market is primarily supported by stringent government regulations that mandate compulsory third-party coverage for drivers and the continuous expansion of the global vehicle fleet which necessitates policy issuance. These fundamental drivers sustain a baseline of demand that exists independently of broader economic volatility or temporary consumer trends.

However, the sector faces a substantial hurdle regarding the escalating severity of claims driven by modern vehicle technology. The integration of complex components such as advanced sensors and electric powertrains significantly increases the expense of restoration after an incident. According to Insurance Europe, in 2024, the cost of repairing electric cars was approximately 30% to 35% higher than that for comparable internal combustion engine vehicles. This disparity forces insurers to constantly recalibrate pricing models to preserve profitability while maintaining affordability for policyholders.

Key Market Drivers

The integration of Telematics and Usage-Based Insurance (UBI) technologies is fundamentally reshaping the Global Auto Insurance Market by transitioning risk assessment from static proxies to real-time behavioral analysis. Insurers are increasingly leveraging data on acceleration, braking, and smartphone usage to create personalized premium structures that incentivize safer driving habits and reduce claim frequencies. This technological shift not only enhances underwriting precision but also actively mitigates road risks. According to Cambridge Mobile Telematics, April 2025, in the 'Distracted Driving Trends' report, distracted driving behaviors fell by 8.6% in 2024, a reduction largely attributed to the growing enrollment in UBI programs. This decline in risky behavior directly correlates with improved loss ratios for carriers, allowing them to maintain profitability while offering competitive pricing to low-risk policyholders.

Concurrently, the market is propelled by rising global vehicle production and ownership rates, which ensure a steady stream of new policy originations due to compulsory liability laws. As the global fleet expands, the absolute volume of required coverage grows, providing a resilient revenue baseline for the industry. According to the European Automobile Manufacturers' Association, March 2025, in the 'Economic and Market Report', global car sales reached 74.6 million units in 2024, marking a 2.5% increase compared to the previous year. This influx of new vehicles is accompanied by heightened consumer activity in the insurance sector. According to TransUnion, January 2025, in the 'Insurance Personal Lines Trends and Perspectives Report', auto insurance shopping activity increased by 20% year-over-year in the fourth quarter of 2024, reflecting a dynamic marketplace driven by fleet expansion and price sensitivity.

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Key Market Challenges

The escalating severity of claims driven by modern vehicle technology stands as a persistent barrier to the sustainable growth of the global auto insurance market. As vehicles increasingly rely on complex electronics, integrated sensors, and electric powertrains, the financial burden associated with collision repairs has risen sharply. This inflationary pressure on claims costs directly erodes underwriting margins, forcing insurers to allocate substantial capital toward settlement payouts rather than business development or market expansion efforts. Consequently, the industry contends with a difficult operational environment where the cost of restoring advanced vehicles frequently outpaces the premiums collected, creating instability in financial planning.

This trend places immense pressure on profitability, limiting the capacity of insurers to maintain competitive pricing structures necessary for broader market penetration. According to the Association of British Insurers (ABI), in 2025, motor insurers paid out £3.2 billion in claims during the first quarter alone, the highest quarterly figure on record, driven largely by elevated repair costs. Such substantial financial outflows hamper the industry's ability to stabilize rates, creating friction that complicates long-term growth strategies and capital reinvestment.

Key Market Trends

The implementation of Artificial Intelligence for automated claims processing is streamlining the settlement lifecycle, significantly reducing the administrative burden on carriers and improving customer satisfaction. Insurers are deploying computer vision and machine learning algorithms to assess vehicle damage through photo analytics, allowing for near-instantaneous payout approvals without the need for physical inspections. This operational shift addresses the industry's need for efficiency and scalability amidst rising claim volumes. According to the National Association of Insurance Commissioners (NAIC), February 2025, in the 'Big Data and Artificial Intelligence Working Group Survey', 88% of auto insurers reported that they currently use, plan to use, or explore AI models within their operations, highlighting the sector-wide commitment to digital modernization.

Simultaneously, the expansion of embedded insurance models via OEM partnerships is fundamentally altering distribution channels by integrating coverage directly into the vehicle purchase journey. Automakers are leveraging their access to vehicle data and customer touchpoints to offer seamless, point-of-sale policy issuance, effectively bypassing traditional agency networks. This model creates a closed-loop ecosystem where the manufacturer controls both the asset and the risk transfer mechanism, resulting in lower acquisition costs and higher retention rates. According to Tesla, March 2025, in the '2024 Financial Results for Insurance Carrier Subsidiaries', the company's insurance program through State National generated $654 million in premiums, representing a 69% increase from the previous year, which underscores the rapid consumer acceptance of manufacturer-led insurance solutions.

Segmental Insights

The Insurance Agents and Brokers segment is emerging as the fastest-growing channel in the Global Auto Insurance Market, primarily driven by the increasing consumer demand for personalized advisory services and cost-effective policy comparisons. As vehicle technologies and coverage options become more complex, policyholders increasingly rely on intermediaries to navigate intricate terms and ensure compliance with mandates from transportation authorities. Furthermore, the rapid integration of digital platforms by modern brokerage firms allows customers to evaluate multiple carriers simultaneously, effectively combining the convenience of online tools with the trusted expertise required for comprehensive risk management.

Regional Insights

North America maintains a dominant position in the global auto insurance market, driven primarily by stringent regulatory frameworks and high vehicle ownership rates. Specifically, strict state-level mandates in the United States enforce compulsory liability coverage for drivers, ensuring consistent demand for policies. The market strength is further supported by the presence of established insurers and rising costs associated with vehicle repairs and medical care, which necessitate higher coverage levels. Additionally, the widespread consumer adoption of comprehensive insurance plans continues to reinforce the region's financial leadership in the global sector.

Recent Developments

• In October 2025, State Farm and Volvo Car Financial Services U.S. entered into a collaboration to integrate auto insurance directly into the vehicle purchasing process. The partnership enabled customers to generate quotes and purchase coverage seamlessly while shopping for a vehicle at dealerships or online platforms. By connecting buyers directly with agents, the initiative aimed to simplify the insurance acquisition experience for new car owners. Leadership from both organizations noted that the joint effort aligned with their shared commitment to safety and customer service, providing a streamlined, personalized solution for vehicle protection at the point of sale.
• In October 2024, Next Insurance appointed a major auto insurer, GEICO, as a new agency partner to significantly broaden its distribution network. This strategic alliance allowed the established auto insurance provider to offer the insurtech's commercial policies, including commercial auto coverage, directly to its customer base. The partnership was designed to facilitate access to tailored insurance products for small businesses and marked a notable expansion of the digital insurer's reach through third-party agents. The collaboration aimed to serve business owners by integrating digital commercial coverage options into the partner's existing platforms, enhancing the overall customer experience.
• In June 2024, Stellantis Financial Services US announced a strategic partnership with bolt to enhance the auto insurance purchasing experience for its North American customers. This collaboration enabled vehicle owners of brands such as Chrysler, Dodge, and Jeep to purchase coverage directly through manufacturer websites and mobile applications. The program utilized the insurtech company's data and technology exchange to provide personalized insurance options from a panel of carriers. Executives indicated that the initiative aimed to simplify the buying process and would eventually scale to include usage-based choices using telematics data to further customize offerings.
• In April 2024, Allstate released findings from a study regarding the safety impact of its usage-based insurance program, Drivewise. The research analyzed driving data and determined that customers who opted into the telematics feature were 25% less likely to be involved in a severe collision compared to those who did not. The company utilized data from its analytics partner to identify that program participants also displayed safer driving behaviors, such as handling their phones less frequently while driving. The insurer highlighted these insights to emphasize the strong correlation between telematics adoption and improved road safety for policyholders.

Key Market Players

• Allianz SE
• Allstate Insurance Company
• Admiral Group Plc
• China Pacific Insurance (Group) Co., Ltd.
• Ping An Insurance (Group) Company of China, Ltd
• Zurich Insurance Company Ltd
• AXA SA
• Property and Casualty Company Limited (PICC)
• Tokio Marine Holdings, Inc.
• GEICO General Insurance Company

By Coverage	By Vehicle Type	By Provider	By Region
Third-Party Liability Coverage Collision/Comprehensive/ Other Optional Coverage	New Vehicle Used Vehicle	Insurance Companies Insurance Agents/Brokers Others	North America Europe Asia Pacific South America Middle East & Africa

Report Scope:

In this report, the Global Auto Insurance Market has been segmented into the following categories, in addition to the industry trends which have also been detailed below:

• Auto Insurance Market, By Coverage:

• Third-Party Liability Coverage
• Collision/Comprehensive/ Other Optional Coverage

• Auto Insurance Market, By Vehicle Type:

• New Vehicle
• Used Vehicle

• Auto Insurance Market, By Provider:

• Insurance Companies
• Insurance Agents/Brokers
• Others

• Auto Insurance Market, By Region:

• North America
• United States
• Canada
• Mexico
• Europe
• France
• United Kingdom
• Italy
• Germany
• Spain
• Asia Pacific
• China
• India
• Japan
• Australia
• South Korea
• South America
• Brazil
• Argentina
• Colombia
• Middle East & Africa
• South Africa
• Saudi Arabia
• UAE