While some people are already worrying about what the self-driving car will do to auto insurers over the long term, the global motor vehicle insurance market is looking forward to robust growth for at least the next five years.
This growth will benefit auto insurers, including Berkshire Hathaway’s GEICO.
In Research and Markets most recent edition of the “Global Motor Vehicle Insurance Market 2016-2020” report the company is forecasting that the global motor vehicle insurance market will grow at a compound annual growth rate of 5.91% during the period 2016-2020.
The report covers the present scenario and the growth prospects of the global motor vehicle insurance market for 2016-2020. To calculate the market size, the report considers two types of end users:
• Personal insurance premiums
• Commercial insurance premiums
According to the report, a trend that is already impacting the market is the implementation of advanced analytics tools to reduce fraudulent claims. According to the National Insurance Crime Bureau (NICB), insurance fraud is the second biggest white-collar crime in the US after tax evasion. Advanced tools, such as big data analytics and geospatial analysis, are making it easier for insurance companies to reduce losses stemming from fraud claim.
The report also notes that a key growth driver is the mandate to buy insurance policies. A motor vehicle insurance covers any financial risk that can crop up while driving the vehicle. In other words, an insurance company will cover losses arising from theft, damages, or accidents – if such incidents are covered under the policy.
© 2016 David Mazor
Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.