As per GlobalData’s Asia-Pacific motor insurance industry report, the global motor insurance industry grew at a CAGR of 1.8% during the period 2016–20, with growth mainly driven by the expansion of the middle-class in Asia and other emerging markets.
Outlook
As governments across the region rushed to impose partial or full lockdown in 2020 following the COVID-19 outbreak, the shock on the automotive sector was considerable, as it grappled with production halts by component manufacturers, supply chain disruptions, declining domestic sales and export volumes, and subsequently registering temporary layoffs as an aftermath of production halts.
With the resumption of economic activities, some markets such as China started showing signs of recovery. Following a flat growth in 2020, the Asia-Pacific motor insurance industry is expected to grow by 5% in 2021.
Even after economic recovery, a global shortage of semiconductors adversely impacted the sale of passenger vehicles in 2021 and its impact is expected to persist over the short term. With the gradual recovery in market conditions, demand for electric vehicles and product innovations such as usage-based insurance is expected to support the industry’s growth over the next five years.
During the lockdown, the demand for customized motor insurance surged particularly from ride-share services providers such as Uber, Tada (South Korea), and Ola (India).
Conducive regulatory policy on FDI will cater to business expansion for multinational insurers
Relaxation in FDI in insurance in many markets including China and India is expected to create a new market opportunity for multinational insurers. For example, after the FDI limit was enhanced in India, Japanese insurer Tokio Marine increased stake in its joint venture IFFCO-Tokio.
Similarly, after Myanmar liberalized its insurance industry, another Japanese insurer Sompo Japan formed a joint venture with AYA Myanmar General Insurance.
Overall, four out of the top 10 regional insurers were based out of Japan and collectively accounted for 64.8% of the market share in 2020. They included MS&AD Insurance Group, Tokio Marine, Sompo Holdings, and Sony Assurance Inc.
Access the full report: Motor Insurance Industry Outlook in Asia-Pacific.
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