Motor Insurance Market – Global Industry Size, Share, Trends, Opportunity, and Forecast, Segmented By Vehicle Type (New Vehicles, Old Vehicles), By User (Personal Motor Insurance, Commercial Motor Insurance), By Policy Type (Third Party Motor Insurance, Fire & Theft Motor Insurance, Comprehensive Motor Insurance), By Provider (Insurance Companies, Insurance Agents/Brokers, Others (Insurtech Companies, etc.)), By Region, By Competition Forecast, 2021-2031F

Forecast Period	2027-2031
Market Size (2025)	USD 982.67 Billion
CAGR (2026-2031)	8.56%
Fastest Growing Segment	New Vehicles
Largest Market	Europe
Market Size (2031)	USD 1608.52 Billion

Market Overview

The Global Motor Insurance Market will grow from USD 982.67 Billion in 2025 to USD 1608.52 Billion by 2031 at a 8.56% CAGR. Motor insurance is a financial product designed to safeguard vehicle owners against financial losses resulting from traffic accidents, theft, and natural disasters, while also covering legal liabilities for third-party bodily injury or property damage. The primary driver supporting market growth is the enforcement of strict government regulations that mandate compulsory liability coverage, ensuring a consistent baseline of demand across most jurisdictions. Additionally, the continuous rise in global vehicle ownership and the ongoing expansion of the automotive sector significantly broaden the pool of insurable assets, further fueling steady sector development independent of technological trends.

According to the Association of British Insurers, in 2024, motor insurers paid out a record £11.7 billion in claims, a figure attributed to surging theft rates and repair costs. This data highlights a significant challenge impeding market expansion, which is the escalating severity of claims driven by inflationary pressures and the high expense of repairing technologically advanced vehicles. Such rising costs threaten underwriting profitability and necessitate premium adjustments that may negatively impact affordability for price-sensitive policyholders.

Key Market Drivers

The surge in adoption of electric and hybrid vehicles is a transformative driver reshaping the Global Motor Insurance Market by altering risk profiles and claims dynamics. As governments and consumers prioritize sustainable mobility, the influx of these technologically complex vehicles has forced insurers to recalibrate underwriting models to account for higher repair severities. Electric vehicles (EVs) typically require specialized technicians and parts, leading to significantly inflated claim costs compared to traditional automobiles. According to CCC Intelligent Solutions, April 2025, labor rates for EV repairs were approximately 30% higher than those for internal combustion engine vehicles in 2024, a disparity that directly pressures carrier margins and necessitates premium increases. This escalation in asset value and repair expense has contributed to broader sector expansion, with Allianz Research reporting in May 2025 that global property and casualty insurance premiums increased by 7.7% in 2024, partly driven by the growing insurability needs of this modern fleet.

Simultaneously, the integration of telematics and usage-based insurance (UBI) technologies is revolutionizing the market by shifting pricing from static proxies to real-time behavioral data. Insurers are increasingly leveraging these tools to offer personalized premiums that reward safe driving, thereby attracting low-risk policyholders and mitigating overall claim frequency. This technological adoption acts as a critical countermeasure to rising claims costs by actively encouraging safer road behavior and reducing accident rates. For instance, according to Cambridge Mobile Telematics, April 2025, distracted driving incidents fell by 8.6% in 2024, a reduction largely attributed to the incentives and feedback loops provided by widespread telematics programs. This data-driven approach not only enhances customer engagement but also provides insurers with granular insights to manage risk more effectively in a volatile economic environment.

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Key Market Challenges

The escalating severity of claims, driven by inflationary pressures and the high expense of repairing technologically advanced vehicles, represents a critical impediment to the development of the Global Motor Insurance Market. As modern automobiles increasingly incorporate complex sensors and sophisticated driver-assistance systems, the financial burden of repairing even minor damages has surged disproportionately. This rapid increase in repair costs erodes underwriting profitability, forcing insurers to absorb higher payouts that frequently outpace premium revenues. To maintain financial stability, carriers are often compelled to raise premiums significantly, which directly reduces affordability for the average consumer and restricts the expansion of the addressable market.

According to the Insurance Information Institute, in 2025, personal auto claim severity was reported to have accelerated drastically, with the compounded annual growth rate nearly tripling to 10.9 percent for the period from 2019 through 2024. This data illustrates the profound financial pressure on the industry, as the rising cost per claim exceeds the pace of standard rate adjustments. Such economic strain forces insurers to implement pricing corrections that can lead price-sensitive policyholders to reduce coverage limits or forgo optional policies, thereby dampening the overall sector's growth trajectory.

Key Market Trends

The integration of Artificial Intelligence for Automated Claims Processing is fundamentally altering the operational landscape of the Global Motor Insurance Market by replacing manual adjudication with algorithmic decision-making. Insurers are actively deploying computer vision and machine learning models to assess vehicle damage through photos, validate coverage, and settle payments instantly, thereby drastically reducing administrative overhead and settlement cycle times. This shift not only enhances customer satisfaction through speed but also improves underwriting precision by identifying patterns that escape human detection. According to TradingView, March 2025, in the 'Lemonade's Q4 Surge' article, the insurer achieved a 12 percentage point year-over-year improvement in its gross loss ratio for the fourth quarter of 2024, a result directly attributed to the efficiency and accuracy of its AI-driven claims and underwriting systems.

Simultaneously, the Expansion of Embedded Insurance Models via Automotive OEMs is disrupting traditional distribution channels by integrating coverage directly into the vehicle purchase journey. Manufacturers are leveraging their proprietary access to vehicle data and point-of-sale interactions to offer seamless, bundled policies that undercut third-party intermediaries and simplify the buying process for consumers. This model capitalizes on the convenience demanded by modern drivers, effectively turning the car dealership and digital configuration portals into primary sales platforms. According to Dig-In, January 2025, in the 'Polly: 84% of Millennials and Gen Z want embedded insurance options' article, 84% of Millennial and Gen Z consumers expressed a specific desire to have insurance included in their vehicle purchase, signaling a massive generational shift toward these integrated adoption channels.

Segmental Insights

The New Vehicles segment is projected to emerge as the fastest-growing category within the Global Motor Insurance Market, driven by the increasing volume of global automobile sales. As consumer purchasing power recovers, the demand for passenger and commercial vehicles is rising, necessitating immediate insurance coverage to comply with strict registration laws enforced by transport authorities. Furthermore, the prevalence of vehicle financing requires borrowers to maintain comprehensive policies to protect the asset's value for lending institutions. This combination of regulatory compliance and financial mandates creates a sustained demand trajectory for insurance products covering newly purchased vehicles.

Regional Insights

Europe maintains a leading position in the global motor insurance market primarily driven by stringent laws that mandate third-party liability coverage for all vehicles. This regulatory requirement ensures consistent policy adoption across the region. The market is further supported by high vehicle density and a well-established automotive sector that generates significant premium revenue. Organizations such as the European Insurance and Occupational Pensions Authority contribute to this stability by harmonizing supervisory standards among member states. Consequently, the combination of compulsory insurance laws and widespread vehicle ownership secures Europe's status as the dominant regional market.

Recent Developments

• In October 2025, Allianz UK announced a five-year strategic partnership with Ticker, a connected motor insurance provider. Under this agreement, the major insurer committed to providing underwriting and claims handling services across the insurtech's entire portfolio, which includes policies for young drivers, van owners, and pay-per-mile customers. The collaboration integrates the insurer's established market capacity with the partner's advanced data science and telematics capabilities to enhance pricing accuracy and fraud detection. This alliance is intended to support the growth of connected insurance solutions and improve road safety by encouraging better driving habits through data-driven insights.
• In July 2025, the digital insurer Lemonade expanded its automotive insurance footprint by launching its car insurance product in Indiana. This strategic move increased the availability of the company's telematics-enabled offerings to a broader segment of the United States market. The AI-powered product utilizes a mobile application to monitor and assess driving behavior, which allows for more accurate risk assessment and fairer pricing models based on actual usage. This expansion enables customers in the region to bundle auto coverage with other policy types, such as home or renters insurance, fostering a unified digital experience.
• In July 2024, OpenRoad, a new specialized insurance provider, officially launched its operations to serve the collector vehicle market. The company began offering coverage in select Midwestern states, including Ohio, Illinois, Indiana, and Wisconsin, with plans for further national expansion. This new entrant focuses on classic and modern collector cars, providing specialized protection features that differ from standard auto policies, such as agreed value coverage and deductible waivers. The launch was aimed at addressing rising insurance premiums for enthusiasts by utilizing a pricing model that accounts for the typically lower accident frequency associated with collector vehicles.
• In June 2024, Stellantis Financial Services US announced a strategic partnership with the insurtech company bolt to launch an embedded insurance program. This collaboration enables customers to purchase auto insurance policies directly through the automotive manufacturer's websites and mobile applications, effectively streamlining the vehicle ownership experience. The initiative utilizes the partner's technology exchange to provide coverage options from a panel of insurers, allowing for personalized solutions. The program was designed to simplify the insurance purchasing journey for vehicle owners and establish a foundation for future scalability into usage-based insurance products driven by telematics data and analytics.

Key Market Players

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

By Vehicle Type	By User	By Policy Type	By Provider	By Region
New Vehicles Old Vehicles	Personal Motor Insurance Commercial Motor Insurance	Third Party Motor Insurance Fire & Theft Motor Insurance Comprehensive Motor Insurance	Insurance Companies Insurance Agents/Brokers Others (Insurtech Companies, etc.)	North America Europe Asia Pacific South America Middle East & Africa

Report Scope:

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

• 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
• 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