Progressive vs State Farm – world’s largest auto insurer revealed

Gross direct written premiums (GDWP) for the global auto insurance market rose to about $822.5 billion last year, with Progressive overtaking State Farm to become the world’s largest underwriting group in the sector, according to a new study by insurance marketing and consulting firm Insuramore. Berkshire Hathaway and China-based PICC and Ping An were also among the top five.

The study also showed that many insurers struggled to achieve significant growth in their GDWP for auto insurance in 2021, and have consequently suffered deteriorating profitability amid higher-than-anticipated auto insurance claims inflation in 2022. However, a few companies did report strong, double-digit growth last year, according to Insuramore. These included Sampo, thanks to its acquisition of Hastings Group, along with Root and Skyfire, through organic growth.

While Root remains loss-making, Skyfire has been profitable in recent years. In 2021, it was ranked for the first time among the world’s top 200 groups by auto insurance GDWP.

“Belonging to First Central Group, an insurance distribution and technology enterprise active in the US and focused principally on selling through online marketplaces (a.k.a. comparison sites), the progress of Skyfire illustrates how there is scope for competitors with an apt and genuinely differentiated proposition to take on incumbent underwriting groups even in a relatively mature and tough sector such as auto insurance,” Insuramore said.

The report said that a key question for the global auto insurance market in the future will be the extent to which auto manufacturers elect to participate in the insurance sector. Historically, the preference of manufacturers who dipped a toe into the sector has been to develop branded policies underwritten by conventional insurers rather than take on underwriting risks themselves.

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A notable exception is Volkswagen, which in 2013 launched Volkswagen Autoversicherung in Germany as a joint venture with Allianz. However, in 2021 its share of GDWP in the German auto insurance market was still less than 1% despite its having a much higher share of vehicle sales, Insuramore said.

The sector is keeping an eye on Tesla, which introduced its first branded auto insurance policy in the US in 2019 and began underwriting cover in selected states through its own insurance business this year. Tesla’s insurance venture is encouraged by its ability to obtain real-time driving data from its vehicles and by the degree to which it can embed auto insurance as part of a subscription service for its customers, Insuramore said.

As other auto manufacturers increase sales of connected vehicles, they may show more interest in the opportunities for them in auto insurance, Insuramore said.