Report Overview

Lenient traffic laws in India and growing consumer awareness of the benefits of car insurance are driving the growth of the country’ car insurance market. Additionally, in India, it is mandatory for all car owners and drivers in India to have car insurance, which is the primary factor driving the India car insurance market.

India Car Insurance Market- Industry Trends & Forecast Report 2028

India car insurance market is experiencing impressive growth, and is expected to grow at a CAGR of 8.0% between the forecast period (2022-2028). Getting car insurance is a government-mandated requirement for all car owners and drivers in India, which is driving the growth of the market. Furthermore, India's lenient traffic laws and its growing awareness of automobile insurance will likely drive India’s car insurance market over the forecast period.

India Car Insurance Market- Overview

Car insurance is a way to protect one's vehicle from unanticipated disasters and accidents. It is an agreement between the insurer and the policyholder to help cover the cost of unfortunate events related to vehicles, such as theft and other losses caused by accidents. The policyholder pays monthly or annual premiums to the car insurance market which are pre-decided. Some car insurance policies also cover the death of the driver in addition to bodily injury and vehicle damage. Generally, car insurance policies are valid for a specific period of time and must be renewed periodically.

India Car Insurance Market Forecast and Trends

Growth Drivers

Mandatory Regulatory Compliance by Law

According to the Motor Vehicle Act, all the vehicles being operated in public spaces in India must have motor vehicle insurance cover. The policyholders need to get at least a third-party liability motor insurance cover to run their cars on Indian roads. Other policies are also being framed from time and again to boost the adoption of car insurance and protect consumers’ rights. For instance, Madras High Court, in August 2021 said that ‘bumper-to-bumper’ insurance should be mandatory on new vehicles sold from September 2021, as reported by IndiaTV news channel.

Increasing Cases of Road Accidents

According to the World Health Organization, India ranks quite high in the number of road accidents per year. According to the Ministry of Road Transport and Highways, there were 449,002 traffic accidents in the country in 2019, resulting in 151,113 deaths. The report also revealed that driving on the wrong side of the road and over-speeding are the main causes of these accidents. As a result, vehicle owners are increasingly taking out car insurance policies that provide protection from lawsuits in addition to benefits for the survivors in the event of a fatal accident.

Restraints

High Premium Rates and Weak Law Enforcement

The high premium rates of car insurance act as a major restraint for the growth of the India car insurance market. This is due to the high GST rates on car insurance policies. At present, a GST of 18% is applicable on car insurance policy, which has to be borne by policyholders in the form of higher premiums. There is also a gap between the number of cars in India and the number of cars that are insured because of the weak enforcement of the Motor Vehicle Act. In the month of December 2020, The Times of India reported that 57% of Indian vehicles were uninsured.

Impact of COVID-19 on India Car Insurance Market

The sudden emergence of the COVID-19 pandemic adversely impacted the entire automobile industry in India, directly influencing the country's car insurance market. Soon after India witnessed the ghastly side of the second wave of the pandemic in 2021, the country's car sales experienced the biggest decline in decades. According to a report by the Federation of Automobile Dealers Association (FADA), motor vehicle sales declined by 31% in FY-21. Due to the mandatory nature of car insurance in India, the high premiums of policies also affected the purchasing of vehicles there. Nevertheless, the market is expected to witness lucrative growth opportunities in the forecast period due to increasing digitization and adoption of Insurtech.

India Car Insurance Market - By Type

Based on types, the India car insurance market is grouped into comprehensive insurance policy, third party fire & theft insurance policy, and third-party only policy segment. Among these, the third-party only segment holds the largest share in the India car insurance market as the Motor Vehicle Act makes this type of car insurance coverage mandatory in India. The third-party only policy covers the insured against the consequences of road accidents. The increasing number of road accidents in India is also propelling the growth of this segment in India.

India Car Insurance Market - By Application

Based on applications, the India car insurance market is grouped into commercial and personal segments. Since the Motor Vehicle Act of 1988 requires that cars be insured, the personal auto insurance segment accounts for the largest market share. Furthermore, increasing disposable income and the increasing number of private vehicles in the country is anticipated to drive the personal auto insurance segment in the upcoming years. On the other hand, it is projected that the commercial segment will grow at the highest rate during the forecast period due to the emergence of cab services such as Ola Cabs, Uber, etc.

India Car Insurance Market - Regional Insights

Geographically, the India car insurance market is segmented into North India, South India, East India, and West India. South India dominates the India car insurance market with a high number of road accidents in Southern states such as Tamil Nadu. The high literacy rate and increasing consumer awareness towards the benefits of having car insurance act as a major driving factor for the growth of the car insurance market in South India. Furthermore, North India is also emerging with great potential due to a wide untapped market.

India Car Insurance Market - Competitive Landscape

The leading players in the India car insurance market are Bajaj Allianz Car Insurance, Chola MS Car Insurance, Bharti AXA Car Insurance, Digit Car Insurance, Edelweiss Car Insurance, Future Generali Car Insurance, Kotak Mahindra Car Insurance, Liberty Car Insurance, Reliance Car Insurance, SBI Car Insurance, Tata AIG Car Insurance, and other prominent players.

The market is highly fragmented due to the presence of leading and established industry players. The car insurance companies offer various types of policies that suit customers’ needs to diversify their consumer base. They also offer their policies at different premium rates to target different income groups in India and boost their sales and revenue. Furthermore, the insurance companies also adopt various organic and inorganic market strategies such as partnerships, collaborations, and joint ventures, along with exceptional advertising and marketing tactics to expand their market presence.

Recent Development

• In November 2021, Liberty General Insurance Ltd. announced its partnership with PhonePe, a leading digital payment, and financial services company, to offer motor insurance digitally and provide easy accessibility.

Scope of the Report

By Type

• Comprehensive Insurance
• Third Party Fire & Theft Insurance
• Third Party Only

By Application

• Commercial
• Personal

By Region

• North India
• South India
• East India
• West India