The motor insurance market in the Asia-Pacific (APAC) region is projected to expand at a compound annual growth rate (CAGR) of 5.6%, with written premiums increasing from US$229.2 billion in 2024 to approximately US$301.7 billion by 2029, according to a report by data analytics firm GlobalData.
The report identified China, Japan, Australia, South Korea, and India as the region’s largest motor insurance markets, collectively accounting for 92% of total written premiums in 2024.
Growth drivers include rising vehicle sales, particularly electric vehicles (EVs), government incentives for carbon emission reductions, regulatory shifts, higher insurance tariffs, and advancements in digital technology.
Swarup Kumar Sahoo, senior insurance analyst at GlobalData, noted that the sector is undergoing structural changes.
“The APAC motor insurance market is witnessing a transformation, driven by the rise of EVs and regulatory changes. The region’s economic growth and demographic shifts are also playing a crucial role in shaping the market dynamics. For instance, the surge in vehicle sales post-COVID-19 has increased motor policy sales,” he said.
As EV penetration increases, insurers are introducing specialized policies to cover new risks associated with these vehicles. Regulators in markets such as Taiwan, Singapore, and China are developing frameworks to govern EV insurance products. These regulatory initiatives, combined with government incentives for EV adoption, are expected to contribute to sustained growth in motor insurance premiums.
Additionally, insurers are implementing artificial intelligence and digital solutions to improve operational efficiency and service quality.
The integration of auto manufacturers into the insurance sector is also influencing the market. In May 2024, Chinese EV manufacturer BYD secured regulatory approval for its motor liability insurance offering following its acquisition of an insurance provider. This reflects a broader trend where automakers are leveraging insurance capabilities to enhance customer experience and expand their market presence.
China’s growing new energy vehicle (NEV) market, which represented one-third of total vehicle sales in 2023, highlights further opportunities for insurance growth.
Sahoo said that insurers are using AI-driven data analysis to refine risk assessment models for NEVs, allowing for more tailored underwriting and pricing strategies. However, strict regulatory oversight limits the extent to which insurers can adjust premium rates, presenting a challenge for profitability.
“Despite these hurdles, the focus on underwriting rigor and moderate rate increases is expected to sustain profitability and drive growth in the coming years,” he said.
The adoption of telematics-based policies is also reshaping the sector. Pay As You Drive (PAYD) insurance models, which calculate premiums based on vehicle usage and driving behaviour, are gaining traction in South Korea, Singapore, Malaysia, and India. The growing acceptance of such policies could offset rising premium costs and influence market dynamics in the coming years.
Looking ahead, regulatory measures and technology adoption are expected to remain key factors shaping the APAC motor insurance landscape. Countries such as Indonesia are considering mandatory third-party liability insurance, while Malaysia has set targets for increasing EV adoption by 2030.
Insurers will need to adapt to evolving regulations and leverage technological advancements to remain competitive and capture growth opportunities in the region.
