by Increasing Demand For Car Insurance in India
Investing in insurance is an essential aspect of any personal financial plan. From traditional life insurance to home and even travel, the global insurance market is replete with various types.
Over the last few years, India has seen significant growth in its insurance market. Data suggests that this growth will continue for the next several years. As per a report by Swiss Re, India is expected to become the sixth-largest insurance market globally by 2023. And one of the insurance sectors seeing an increasing demand is car insurance, a subset of motor insurance, in India.
Read on the know more about the increasing demand for car insurance in India and the reasons behind it.
Car insurance in India: Key Trends
The insurance industry in India is primarily driven by life insurance. However, the non-life insurance space is dominated by motor insurance. It accounted for 34.1% of all non-life insurance premiums in FY21.
Among the various offerings extended by the motor insurance sector, the Indian car insurance market has been growing steadily. A 2022 study by research company BlueWeave Consulting estimates that the car insurance market will see a compound annual growth rate (CAGR) of 8.0% between 2022 and 2028. The report also states that of the four regions in India – North, South, East, and West – South India leads the car insurance market.
Reasons behind increasing car insurance demand
Increase in car ownership
Over the years, India has seen a rise in car ownership. As per the 2019-2021 National Family Health Survey, 8% of Indian households (one in 12 households) own cars. This is a considerable rise given that between 2005 and 2006, the percentage of car owners in the country was only 2.8%. The increase in car ownership also propelled the growth of the car insurance market, with people choosing to protect their vehicles with suitable insurance plans. The taxi industry and the growth of ride-sharing companies like Ola and Uber have also contributed to increasing demand for car insurance in India.
Government regulations
Indian government regulations have greatly supported the motor insurance industry. For instance, the Motor Vehicle Act 1988 makes motor vehicle insurance covering third-party risk mandatory by law. A vehicle cannot ply in public without insurance cover for third-party risks. The risk of serious loss in case of accidents and heavy fines by authorities for lack of insurance has encouraged more people to seek car insurance.
The Insurance Regulatory and Development Authority of India has also made active efforts to make car insurance a personalised experience. In July 2022, IRDAI allowed general insurance companies to offer policies such as Pay As You Drive and Pay How You Drive based on the car owner’s driving history.
The premium cost is based on your driving pattern, and those with lower mileage needs can choose policies based on their usage. While the terms and conditions of each policy are based on the insurer, such regulations aim to encourage more car owners to invest in insurance.
Growing insurance awareness
In addition to favourable government regulations, increased awareness among the public about the advantages of car insurance has also helped the industry’s growth. Both private enterprises and government schemes have worked towards educating users about the benefits of insurance. Government endeavours like the accident protection scheme Pradhan Mantri Suraksha Bima Yojana have encouraged people to invest in insurance.
Digital Penetration and financial literacy
The rise in awareness about car insurance (and insurance, in general) across the country has been made possible by the rising digital penetration. Digitisation has given people access to the latest developments in the world of insurance, including new regulations and policies.
Insurance companies, too, have understood the power of digitalisation and are providing users access to services using advanced technology. This, in turn, has given users more autonomy over their finances and improved their financial literacy.
Rise of ‘Insurtech’
In addition to improving their reach through digitisation, insurance companies are also leveraging tools to simplify investment practices for users. One such industry model is insurtech, which combines insurance and technology to help you select, personalise and even claim your insurance policies on e-platforms such as mobile apps and websites. Now, you can compare hundreds of policies on a device of your choice and invest in a car insurance plan that suits you best.
Conclusion
If you are looking to invest in car insurance, there are a variety of policies to choose from. As a policyholder, you must ensure that the car insurance coverage meets your demands. For instance, some insurers do not protect your cars from damage caused by weather or natural calamities. But this criterion should be on top of your list if you live in a flood-prone or earthquake-prone region.
The rise in car insurance demand in India points to a greater awareness among customers about the importance of insurance. Regulations that promote car insurance ownership by the Indian government and the rise in car ownership have also contributed to the rising numbers.
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