Swiss Re has issued a cautious outlook for the global motor insurance industry, citing rising claims costs, changing mobility trends, and growing economic and environmental pressures.
Motor insurance makes up about 40% of the $2.2 trillion property and casualty insurance market. However, the sector is feeling the strain from several directions, according to Swiss Re’s latest report, “Shifting Gears in a Changing Landscape – A Global Perspective of Motor (Re)Insurance.”
In 2024 alone, around 90 million light vehicles were sold worldwide. Each one required mandatory motor insurance to cover third-party liability and vehicle damage.
Although the number of accidents has gone down—thanks in part to better vehicle safety features and shorter driving distances after COVID-19—the severity of accidents has gone up. This is due to faster driving and more distractions behind the wheel.
At the same time, modern cars are becoming more complex. This, combined with inflation, is pushing up the cost of repairs and medical care. These rising expenses are putting pressure on insurance companies’ profits.
Swiss Re also noted that new tariffs are likely to raise claim costs even more. Shortages in spare parts and continued supply chain issues mean that repairs will take longer and cost more.
Climate events like floods and hailstorms are adding to the damage claims. These weather-related losses might not yet be fully included in current premium prices.
Laure Forgeron, Swiss Re’s Chief Underwriting Officer for Casualty, said that the combination of rising claims and supply disruptions is changing the industry. She added that insurers need to prepare for the next wave of vehicle technology.
“Cars of the future will be more connected, autonomous, shared, and electric. Insurance must evolve to meet this new reality,” Forgeron said.
In the Asia-Pacific region, the motor insurance market is also changing rapidly. Laurel Hu, Head of Casualty Underwriting APAC at Swiss Re, pointed to rising adoption of electric vehicles, more advanced technology, and higher medical costs as key factors shaping how insurance is offered.
COVID-19 had a lasting effect as well. It initially changed how people drove, then added pressure on claims inflation due to part shortages. Many countries still haven’t returned to pre-pandemic driving levels.
At the same time, competition among insurers is rising again after recent price adjustments.
Regulation is also shifting. In some regions like India, deregulation has encouraged new insurance products. However, it has also increased the risk of fraud.
In China, even though claims inflation is stable, profitability remains a concern. More frequent natural disasters and the growing impact of electric vehicles are challenging insurance performance.
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