The global private and commercial auto insurance market is forecast to continue growing
The global market value of auto insurance premiums has been rising steadily since 2014 and new forecasts expect this trend to continue well into 2018.
According to Finaccord, a leading market research company based in London, the global value of the auto insurance market rose to over US$669 billion last year and is expected to continue growing until 2018. In particular, personal motor insurance policies increased in 14 out of the 40 countries analysed by the Finaccord Global Motor Insurance: Size, Segmentation and Forecast for the Worldwide Market Report, while commercial motor insurance policies were on the rise in 18 countries.
The breakdown between the personal and commercial insurance market varies widely at the global level. According to David Parry, a Managing Consultant at Finaccord, for example, the rise in personal motor insurance premiums is especially marked in China. “This is a consequence of the rapid increase in car sales to individual customers there with the result that a market in which commercial motor insurance premiums were formerly dominant is now one in which personal motor insurance premiums account for the majority,” Parry reports.
The fastest growing markets are Thailand, India and China with annual growth rates of 13.9%, 12.2% and 11.0%. The largest motor insurance markets in 2014, remain the United States (US$213.9 billion), China (US$86.4 billion) and Japan (US$ 46 billion), while the fastest growers are Argentina (34%), India (19%) and Turkey (17.1%).
The Finaccord Report also posits that the average market growth from 2014 to 2018 will mirror that of the previous four years. The total market value should cap about US$819 billion by 2018.
The real issue, though, is what will happen on mature markets such as those in Italy and the United Kingdom or those affected by economic difficulties, such as the Russian market. Will telematics outgrow its niche status and step up to propel the insurance market by attracting new business?
A recent Digital Innovation Survey by Accenture entitled Seizing the Opportunities of Digital Transformation reviewed the opinions of 141 global insurance executives responsible for their company’s digital strategy and revealed not only that insurers expect to reap significant benefits from digital innovation and evolution, but also, and perhaps most significantly, that digital transformers – those companies whose digital strategies, investments and activities are truly innovative – are setting the pace for the insurance sector.
Indeed, the success of insurance providers has always depended on their ability to collect, understand and act upon the information provided by clients (age, sex, driving experience, etc.) and by authorities (demographics, age-related statistics, etc.).
Insurance telematics, thanks to its ability to collect and analyse big data and identify structural and behavioural driving patterns, allows insurers to custom-tailor insurance policies to the needs and habits of individual motorists, thereby expanding the natural market reservoir. Moreover, the advantages of telematics services (geo-location services for auto thefts, telemetry and accident dynamics monitoring, video recording devices, emergency alerts) and a whole host of evolving added value services means that insurances can attract a growing number of population segments by providing new benefits.
In fact, Gartner Researchpredicts that by 2020 there will be one quarter billion connected vehicles on the road and that during the next five years, the proportion of new vehicles equipped with telematic devices and capabilities will increase dramatically, making connected cars a major node in the Internet of Things.
Octo Telematics has been at the forefront of this technological evolution since its outset, when it offered the first telematics insurance policies in Italy at the turn of the new century.
Octo now has offices in London, Rome, Madrid, Stuttgart, Boston and San Paulo. This translates into 3.8 million active customers worldwide and 151 insurance partners around the world. Octo Telematics has recorded, processed and stored over 278,000 billion data points to produce a 96 Terabyte database.
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