New York, NY (PRWEB) January 28, 2014
An intensified focus on financial positions and net premium growth for liability insurance products have aided the Automobile Insurance industry over the five years to 2014. From 2009 to 2011, industry operators struggled through a soft insurance market where premium prices were dragged down by the impact of the recession. However, since 2011, auto insurance prices have risen, with private passenger auto insurance prices ultimately forecast to increase at an annualized rate of 2.6% from 2009 to 2014. Largely because of this trend, industry revenue is anticipated to increase at an annualized rate of 2.3% over the same period to $198.5 billion in 2014; this growth includes a 4.9% rise in revenue expected in 2014 alone.
While industry product segments generally do not fluctuate as a share of revenue on a year-to-year basis, the industry's bodily injury and property damage liability products have driven sales for auto insurers in recent years. According to IBISWorld Industry Analyst Stephen Hoopes, “Over the five years to 2014, net premiums written for the industry's liability products are anticipated to rise at an annualized rate of 2.8%, compared with an annualized growth of just 1.0% for collision and comprehensive offerings.” Moreover, “pay as you drive” pricing schemes, which provide quotes based on consumer-specific driving habits, have continued to grow in popularity.
Similar to the industry's product segments, the portion of revenue provided by each of the industry's markets displays a low degree of volatility. Younger consumers continue to account for more accidents than their share of licensed drivers would suggest. As such, these drivers pay larger premiums to account for their higher probability for claims. Yet, the method by which auto insurers distribute their products to these markets has changed over the five-year period, with online sales posing a mounting threat to traditional insurers that rely on sales staffs.
Over the five years to 2019, industry revenue is forecast to increase. Continued improvements in the macroeconomic landscape are anticipated to benefit investment conditions for auto insurers. Given that the majority of auto insurer assets are invested in bonds, forecast increases in interest rates are expected to boost investment gains. “Despite this trend, consolidation in the industry is expected to continue, with larger operators viewing strategic acquisitions as a lucrative method to expand their share of the market,” says Hoopes.
For more information, visit IBISWorld’s Automobile Insurance in the US industry report page.
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IBISWorld industry Report Key Topics
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.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
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