India Motor Vehicle Insurance Market: Current Analysis and Forecast (2024-2032)

Motor insurance is a part of general insurance that offers comprehensive protection coverage to the owners of vehicles of different categories in case of repair and theft. These insurance policies are offered by various public and private sector financial institutions and Banks regulated under the Insurance Regulatory Development Authority of India (IRDAI). The insurance policy covers the majority of the non-consumable items and their damage repair for the insured period of time.

The India Motor Insurance market was valued at USD 12.15 Billion in 2023 and is expected to grow at a strong CAGR of around 6.31% during the forecast period (2024-2032). One of the factors that has been majorly attributed to market growth is the increasing sales of automotive vehicles in the country. Considering the rise of the middle-class population as well as rising disposable income in the country, the automotive industry has benefitted from increasingly high sales in recent years.

This increasing sales has led to the demand for both first-party and third-party insurance, which is mandatory along with the Road tax payment for any automobile purchase. Additionally, with the various policy shifts, the demand for motor insurance will further propel in the coming years.

Additionally, the motor insurance hold a sizeable share in the overall general and health insurance market in India. According to IRDAI, the total premium underwritten in India for motor insurance was INR 70,433.48 crore in 2021-22, which increased to INR 81,280.04 crore in 2022-23. Majority of the share for motor insurance is held by public sector with approximately 80% market representation.

Additionally, the insurance product in the country can only be availed through an Insurance Regulatory Development Authority of India (IRDAI) approved intermediary such as corporate insurance broker or an individual insurance agent.

Apart from this, rising demand for electric vehicles and consumer focus towards premium and sub-premium vehicles has also led to people more cautious to opt for long-term motor vehicle insurance to reduce the motor damage cost.

Based on motor insurance type, the Indian market is bifurcated into own damage and third-party insurance. Considering the policy measures taken to opt for one year of own damage and five years of third-party insurance at the time of purchase of a vehicle. Third-party insurance holds a sizeable market share. Additionally, first-party or own damage insurance is not mandatory as opposed to third-party insurance, which is why buyers frequently purchase third-party insurance, leading to its substantial market share. Considering the mandatory measures taken by the government for the buyers to opt for third-party insurance with every vehicle purchase/ownership, the segment is anticipated to hold its dominant market position in the coming years. The automotive sector is also experiencing a shift from increased sales of premium two-wheelers and four-wheelers in the country that has made the customers more vary towards opting for a long-term own-damage motor insurance policy to reduce the risk of hefty damage cost in any eventual scenario.

Based on the application, the India Motor Insurance market has been segmented into Commercial and private vehicle insurance. Of these, private vehicles have held a major market share due to the sheer size of sales number in recent years. According to the Society of India Automotive Manufacturers (SIAM), the total sales of commercial vehicles in 2023-23 were 9,67,878, whereas the sales of passenger vehicles/cars were 42,18,476. Furthermore, private vehicles also have a stronghold in private vehicle ownership, which has strengthened their position in the motor insurance market. Private vehicle owners are also frequent buyers of motor vehicle insurance policies due to their inclination towards premium vehicles, which require insurance to avoid any hefty damages in case of accidents. According to Rushlane, an auto news website, the sales of 200-500 cc two-wheelers have witnessed a 6.82% sales increase in March 2023 as compared to March 2022. This exhibits an inclination of the buyers towards high-end vehicles in India with premium costs, which often leads to hefty repair costs, forcing the customers to opt for motor insurance for a long period of time.

For a better understanding of the market adoption of Motor Insurance, the Indian Motor Insurance market is analyzed based on its presence in regions such as North India, East India, West India, and South India. Of these, the North India region held the largest share in 2023. North India has a share in automotive sales, and it is looking forward to comprehensively supporting research & development around the automotive sector with its challenges and potential technological solutions. Additionally, the region is home to some of the largest manufacturers of automobiles. Considering the vast volume of production, the region is further anticipated to dominate the demand for Motor Insurance in the coming period.

Some of the major players operating in the market include ICICI Lombard General Insurance, Bajaj Allianz General Insurance, Tata AIG General Insurance, HDFC ERGO General Insurance, New India Assurance Co Ltd, United India Insurance Company Ltd, The Oriental Insurance Co. Ltd., Bharti AXA General Insurance, Reliance General Insurance, and IFFCO Tokio General Insurance.