UK Motor Insurance Market
UK Motor Insurance Market to Touch USD 27.44 Billion by 2028
Published | 15 September 2022
UK Motor Insurance Market is expanding at a single digit growth rate, as motorists in the country are opting for motor insurance policy products to cover the risk of rapidly increasing cost of maintaining or replacing motors due to high inflation.
BlueWeave Consulting, a leading strategic consulting and market research firm, in its recent study, estimated the size of UK Motor Insurance Market at USD 21.50 billion in 2021. Also, BlueWeave forecasts UK Motor Insurance Market to expand at a low single-digit CAGR of 3.6% between 2022 and 2028 to reach a size of USD 27.44 billion by 2028.
UK Motor Insurance Market - Technology Advancements
Introducing STeP, a new digital claims solution in August 2021, will help clients streamline the motor insurance procedure, according to insurance behemoth AXA S.A. According to AXA, STeP has reduced the amount of time between customer notifications and partners arranging repair or salvage to just minutes. In May 2021, GEICO is working with AI technology company Tractable to streamline its auto claim and repair procedures. A patented computer vision technique created by Tractable has been trained on millions of historical claims. Similar to a human assessor, the AI can evaluate vehicle damage based on photographs. GEICO wants to use Tractable's technology to quickly and accurately review estimates while lowering administrative costs.
UK Motor Insurance Market - Increasing Demand
Motor insurance covers vehicles such as cars, trucks, motorbikes, and other types of motorized transportation. As it guarantees financial protection in the event of a vehicle being destroyed as well as injuries to other drivers, passengers, or pedestrians, or third party cover, there is a high demand for motor insurance and an increase in its adoption among customers. Therefore, obtaining the proper level of auto insurance is both a legal need and a necessity. The cost of the following damages, such as bodily injury to the owner or others, lost wages resulting from an injury, full insurance settlement to the nominee holder in case of death, and repairs to the car's damage caused in an accident, can be offset by the financial benefits provided by motor insurance. The UK motor insurance market has a lot of room for expansion in the coming years because traffic accidents are becoming more common in most countries.
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UK Motor Insurance Market - Segmental Coverage
UK Motor Insurance Market is divided into categories for smartphones, embedded systems, black boxes, and other technologies based on kind of technology. Due to growing OEM use, embedded systems held the highest share of the market. The market's highest share belonged to the embedded system category. The ability to differentiate products, provide value-added services, and improve customer relationship management are just a few advantages this technology gives OEMs. Furthermore, they may result in possibly cheaper expenses in the event of product recalls. As a result, these elements are to blame for the growing adoption of embedded systems by significant automakers. A greater CAGR is anticipated for the smartphone market segment during the forecast period, because of its simple installation and low total cost. Additionally, due to open platforms, smartphone apps tend to be fully customizable, modular, and conducive to further development. These elements will support this segment's expansion. Additionally, the classic usage-based insurance system known as the "black box" is widely favored by car owners. It is extremely accurate and records a wide range of data. Furthermore, the need for the black box is anticipated to rise in the upcoming years due to the expanding use of telematics insurance in UBI for medium- and heavy-duty vehicles.
Impact of COVID-19 on UK Motor Insurance market
COVID-19 pandemic significantly changed driving behaviors in 2020. Average kilometers travelled dramatically fell as a result of shelter-in-place orders, the predominance of work-from-home arrangements, and the closure of numerous enterprises. As a result of the pandemic, there have been significant reductions in the number of automobiles on the road, highlighting flaws in present insurance schemes. Although many insurers have provided discounts on monthly premiums to make up for decreased mileage and accident risk, these savings do not adequately account for the extent of the decline in traffic.
More people may switch to policies based on miles driven as a result of the pandemic's impact on price sensitivity and economic instability. According to a Bain & Company survey, 21% of participants had previously bought UBI, and 56% stated they were inclined to do so in the future. In a similar vein, the business re-ran a 2019 study in May 2020 with more than 1,000 licensed drivers to find out how many drivers would feel okay with utilizing normal telematics variables to establish insurance premiums. Approximately 50% of drivers (as opposed to 30% to 40% in 2019) were okay with their insurance being altered depending on factors including speeding, distracted driving, where they drive, what time of day they travel, and the number of miles they drive. This indicates an increase of more than 12% year over year. Arity further claims that, on average each year, about 40% of drivers look for auto insurance. However, more people are likely to migrate to customized UBI programs as demand in lowering family expenses grows. Consequently, the pandemic has sped up the transition to automobile UBI laws.
Because of its successful partnerships and market-leading products, Progressive Corporation is a dominant force in UK Motor Insurance Market. Due to its success in encouraging the program's early adoption, The Progressive Corporation is the dominant player in the market. For instance, Progressive has around 19 million active policies and has logged over 25 billion miles through Snapshot (their UBI program). Additionally, the business is actively participating in fruitful alliances, such as the 2016 agreement for joint research and development in telematics with Generali. These elements contribute to Progressive's market-leading position.
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