Philippines motor insurance industry to grow 9% annually by 2029

This is higher than the global CAGR of 5.03%.

The Philippines’ motor insurance industry is projected to reach at least a 9.0% compound annual growth rate from 2024 to 2029, according to Mordor Intelligence.

Globally, the motor insurance market is expected to grow at a compound annual growth rate (CAGR) of 5.03% from 2018 to 2024. In 2017, motor insurance accounted for 42% of all non-life gross premiums in the property and casualty insurance market. 

Whilst premium growth has stagnated in mature markets, emerging markets have seen rapid expansion in motor insurance. 

Advanced economies are expected to experience an improvement in motor insurance premium growth as their economic conditions improve during the forecast period. Asia, on the other hand, is expected to be the fastest-growing region and is forecast to be three times the world average over the next two years.

The COVID-19 pandemic significantly impacted the Philippines motor insurance market due to economic uncertainty, lockdowns, and a downturn in the auto sector, which negatively affected motor insurance premiums. 

Even prior to the pandemic, factors such as economic challenges and market maturity had already slowed premium growth. However, there has been a rise in auto insurance penetration across both commercial and individual segments, driven by increasing vehicle maintenance costs as cars become more digital and connected.

The motor insurance market in the Philippines has become more competitive, with increased customer bargaining power due to the entry of multiple players offering better insurance deals with appropriate risk coverage. 

The growing rate of vehicle ownership, especially in used vehicle sales, is expected to support healthy growth in the motor insurance sector. The expansion of the middle class, coupled with government support for the automotive industry as a key revenue generator, has also contributed to the rising demand for vehicles, which in turn boosts motor insurance demand.

Motor vehicle sales in the Philippines rebounded in 2021, driven by strong demand for passenger and commercial vehicles. 

This followed a decline in 2020 due to the pandemic and semiconductor shortages. A new tax policy introduced in 2018, known as the Tax Reform for Acceleration and Inclusion (TRAIN), initially caused a drop in vehicle sales by raising prices, but the industry adapted, and sales increased in 2019.