Road to Recovery: Automobile Insurance in the US Industry Market Research Report Now Available from IBISWorld

Share Article

Over the five years to 2012, IBISWorld estimates that revenue for the Automobile Insurance industry will fall at an average annual rate of 0.9% to $178.3 billion. During that time, growth has been hampered by a soft pricing cycle that began in 2005. Furthermore, the Great Recession compounded the already soft pricing cycle and hampered growth by hurting investment returns. Luckily for industry operators, this trend is expected to slowly reverse as the economy turns toward recovery. In general, demand for automobile insurance varies little from year to year, because drivers must have insurance to operate their vehicles and be protected from potential liabilities and losses. In the five years to 2017, IBISWorld estimates that industry revenue will experience growth. As more consumers return to car lots, the number of vehicle registrations and the total insurable value of the US auto fleet will rise, boosting industry revenue and profit. For this reason, industry research firm IBISWorld has added a report on the Automobile Insurance industry to its growing industry report collection.

IBISWorld Market Research

IBISWorld Market Research

Insurance providers will benefit from more car purchases and higher interest rates

Over the five years to 2012, IBISWorld estimates that revenue for the Automobile Insurance industry will fall at an average annual rate of 0.9% to $178.3 billion. During that time, growth has been hampered by a soft pricing cycle that began in 2005. The soft pricing cycle, which reduces the amount that an insurer is able to generate from policies, caused the average expenditure for auto insurance to fall from $843 in 2004 to $785 in 2009, according to the Insurance Information Institute. Furthermore, the Great Recession compounded the already soft pricing cycle and hampered growth by hurting investment returns. Luckily for industry operators, this trend is expected to slowly reverse as the economy turns toward recovery. Consequently, IBISWorld estimates that industry revenue will increase 3.9% in 2012.

Industry firms provide a variety of consumer auto-related insurance products, including collision insurance, property damage liability insurance and bodily injury insurance. The industry also provides commercial vehicle insurance. Insurers pool premiums (i.e. funds) from policyholders to pay for losses that some individual policyholders may incur, making the industry an indispensable part of risk management for consumers. In general, demand for automobile insurance varies little from year to year, because drivers must have insurance to operate their vehicles and be protected from potential liabilities and losses. Consequently, the Automobile Insurance industry is often compared to a utility because demand does not fluctuate with the economic cycle. In fact, the majority of industry revenue is generated through policy renewals, and the largest firms have renewal rates that are in the ballpark of 90.0%.

In the five years to 2017, IBISWorld estimates that industry revenue will experience growth. Operators will likely benefit from a hardening of the insurance market, which will alleviate pricing pressures. Furthermore, the investment income that companies receive will improve as the stock market recovers from the recession. As more consumers return to car lots, the number of vehicle registrations and the total insurable value of the US auto fleet will rise. This factor will boost industry revenue and profit margins. Many of the industry's largest firms, including State Farm Insurance Companies and Allstate Insurance Company, offer a wide range of property, casualty and direct insurance products. Concentration has marginally increased during the past five years as a result of industry consolidation. In the five years to 2012, IBISWorld estimates that the number of firms operating in the industry has declined at an average of 1.8% annually to 1,988. During that time, the largest industry firms have grown organically and through acquisition. For example, major insurance firm AIG sold its auto segment to Farmers after it started experiencing problems related to its housing business. Other large operators have also grown through the acquisition of smaller, regional firms and the development of online platforms, allowing consumers to have auto insurance in minutes. During the next five years, continued consolidation will contribute to the ongoing dominance of the largest automotive insurers.

For more information visit IBISWorld’s Automobile Insurance in the US industry page

Follow IBISWorld on Twitter: https://twitter.com/#!/IBISWorld
Friend IBISWorld on Facebook: http://www.facebook.com/pages/IBISWorld/121347533189

This industry underwrites (i.e. assuming the risk and assigning premiums) auto insurance policies. Car insurance provides financial protection against physical damage to automobiles and bodily injuries resulting from traffic collisions. Automobile insurance can also protect against resulting liability.

IBISWorld industry Report Key Topics

Industry Performance
Executive Summary
Key External Drivers
Current Performance
Industry Outlook
Industry Life Cycle
Products & Markets
Supply Chain
Products & Services
Major Markets
Globalization & Trade
Business Locations
Competitive Landscape
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
Major Companies
Operating Conditions
Capital Intensity
Key Statistics
Industry Data
Annual Change
Key Ratios

About IBISWorld Inc.
Recognized as the nation’s most trusted independent source of industry and market research, IBISWorld offers a comprehensive database of unique information and analysis on every US industry. With an extensive online portfolio, valued for its depth and scope, the company equips clients with the insight necessary to make better business decisions. Headquartered in Los Angeles, IBISWorld serves a range of business, professional service and government organizations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.com or call 1-800-330-3772.

###

Share article on social media or email:

View article via:

Pdf Print

Contact Author

Gavin Smith
IBISWorld
+1(310) 866 5042
Email >
Visit website