Guaranteed Auto Protection (GAP) Insurance Market,” The guaranteed auto protection (gap) insurance market was valued at $3.2 billion in 2021, and is estimated to reach $8 billion by 2031, growing at a CAGR of 9.9% from 2022 to 2031.
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Increase in awareness of self-financing firms & auto leasing dealers, in terms of protection against unexpected losses caused by borrowers compels owners & buyers to purchase GAP insurance policy, which fuels the GAP insurance market growth. However, increased competition, a lack of knowledge about the advantages of guaranteed car protection insurance, and changes in policy rules are some of the issues that limit market expansion. The surge in popularity and demand for vehicle finance, on the other hand, heavily favors GAP insurance coverages which drives the growth of guaranteed auto protection insurance market. Therefore, these aspects are anticipated to present prospects to GAP insurance market in upcoming years.
Furthermore, increasing technological advancements in insurance industry by key players is expected to boost the growth of the market in upcoming years. For instance, Tata AIG General Insurance unveiled its “AutoSafe” telematics-based software in June 2020. By monitoring policyholders’ mileage, promoting safe driving, and providing a GPS monitoring facility for anti-theft tools, this program improves their ability to reduce portion of their premium. The program also provides various value-added products including coverage for no claims, regular payments, and depreciation reimbursement. It enables insurers to monitor the driving habits of those who insure their cars, hence lowering the market’s claim rates for GAP insurance.
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By application, the passenger vehicle segment acquired major share of GAP insurance market size. This is attributed to surge in demand for passenger vehicle among consumers and rise in the production of total units of passenger cars globally as compared to commercial vehicles.
Region wise, North America dominated the market in 2021 in GAP insurance market analysis. This is attributed to the fact that increase in e-commerce business has further accelerated commercial vehicles demand for transportation of goods and services. Vehicle owners are purchasing auto insurance with GAP insurance to cover their losses incurred due to accidents, reimburse the costs of vehicle repairs following a crash, medical costs, lost wages, and even legal expenses.
The demand for guaranteed auto protection (GAP) insurance has decreased considerably during the COVID-19 pandemic. Due to strict lockdown regulations throughout all nations, automobile sales have drastically decreased, and the pandemic has had an impact on the selling of auto insurance. Additionally, a number of automobile dealers have temporarily shut down their operations due to a fall in the volume of new policy sales. Thus, these factors hampered the growth of the GAP insurance industry during the pandemic situation.
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KEY FINDINGS OF THE STUDY
- By type, the finance GAP insurance segment led the highest GAP insurance market share, in terms of revenue in 2021.
- On the basis of application, the commercial vehicle segment is expected to exhibit the fastest growth rate during the forecast period in GAP insurance market.
- Region wise, North America generated the highest revenue in 2021.
The key players operating in the Guaranteed Auto Protection (GAP) insurance market analysis include Admiral Group Plc, Allianz, Allstate Insurance Company, American Family Insurance, Aviva, AXA, Berkshire Hathaway Inc., Chubb, Direct Gap, Kemper Corporation, Liberty Mutual Insurance Company, Majesco, Nationwide Mutual Insurance Company, Progressive Casualty Insurance Company, State Farm Mutual Automobile Insurance Company, The Travelers Idemnity Company, and Zurich. These players have adopted various strategies to increase their market penetration and strengthen their position in the industry.
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