India's motor insurance market is experiencing rapid expansion driven by regulatory mandates, multi-year policy options, stricter enforcement, innovative coverage solutions, and digital transformation, collectively enhancing accessibility and customer engagement across the sector.
18 Oct 2025 | 2981 Views | By Dhirendra Nalin Mahyavanshi, Turtlemint
The motor insurance (including own damage and third party) GDPI market in India was valued at approximately US$11.7 billion in FY2025 and is projected to grow at a compound annual growth rate of 10–12% over the next five years, reaching US$19–21 billion by FY2030. This growth is expected to be ...
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The motor insurance (including own damage and third party) GDPI market in India was valued at approximately US$11.7 billion in FY2025 and is projected to grow at a compound annual growth rate of 10–12% over the next five years, reaching US$19–21 billion by FY2030. This growth is expected to be supported by evolving regulations, increasing digital adoption, product innovation, and rising vehicle ownership, which together are driving greater accessibility and penetration across the market.
Here are the 5 main reasons motor insurance is entering a hyper-growth phase:
1. Mandatory Long-Term Insurance Policies
Following a Supreme Court ruling in 2018, IRDAI regulations mandate that every new car carry a Third-Party Liability insurance policy valid for three years, while new two-wheelers require a policy valid for five years. This regulatory framework ensures that new vehicles remain insured for extended periods, thereby attracting more customers to the insurance fold and increasing overall market penetration.
Vehicle owners can continue to purchase standalone Own Damage (OD) policies on an annual basis, independent of their third-party cover, further streamlining consumer choice and boosting insurer competition. This may be particularly beneficial for infrequent drivers, like those who work from home or rely on public transportation, as it tends to result in relatively lower costs under the "Own Damage" portion of their insurance.
2. Multi-Year Policies and Easier Renewals
Apart from the above mentioned mandatory Third-Party Liability insurance policy valid for three years, Insurance providers have introduced multi-year own damage policies for vehicles. Now, imagine not having to update your policy every year. There will be no hassle of comparing rates, filling out forms, and going through the annual trouble.
That is why there is an option of such multi-year coverage. It eliminates the annual hassle while ensuring continuous protection and even makes your motor insurance more affordable. Customers benefit from the convenience of longer-term coverage, which removes the hassle of yearly renewal reminders and worries about premium deposits. This shift appears to be contributing to improved retention rates and a growing base of policyholders, especially for vehicles outside the initial purchase window.
3. Legislative Push for Insurance Penetration
The Motor Vehicles (Amendment) Act of 2019 imposes stringent penalties on owners of uninsured vehicles, making insurance a legal requirement for all motor vehicles. By broadening the scope of mandatory insurance, this amendment in law has opened the market for insurers through innovative products and tailor made offerings i.e. Post add-on covers like zero depreciation, engine protection, loss of consumable, key loss, tyre cover, road side assistance features such as "Pay As You Drive" (PAYD), also referred to as Usage-Based Insurance (UBI), represent a new generation of coverage. Legal mandates, combined with add-ons, result in increased awareness and enforcement. These policies have created a robust foundation for industry expansion, subject to sustained regulatory support and market uptake.
4. Product Innovation: Tailored Add-ons and Usage-Based Policies
As mentioned in the previous point, add-ons amplify the significance of insurance; not only such adds-ons are designed to cater to the needs of a new customer, but they may also save time through multiple renewal processes. However, add-ons such as zero depreciation, engine protection, roadside assistance, and even coverage for loss of keys or tyres enhance the value for buyers. Usage-based insurance options, such as "Pay As You Drive" (PAYD), now allow customers to select an annual kilometer target, offering reduced premiums for infrequent drivers and those opting for alternative modes of transportation. This flexibility appears to resonate particularly with NRIs and urban professionals, who may not use their vehicles daily.
5. Digital Acceleration and Technology Integration
India's insurance sector is undergoing a major transformation, driven by digital innovation, broader distribution channels, and strategic partnerships across industries. These changes are helping insurers reach new customer segments, improve conversions, and fundamentally reshape how insurance products are marketed, sold, and serviced. AI-driven platforms, real-time claims management, telematics devices, smartphones, and online policy purchases are making the entire customer journey seamless and transparent.
The fast-growing adoption of digital solutions makes it easier for new and renewal customers alike to compare, buy, and manage insurance with just a few clicks, supporting competition and premium growth. As India's automotive sector booms in sales and technology, buying trends continue to reshape insurance distribution.
Customers have made decisions to buy insurance for more than its technical benefits, but as a layer of protection over their lives. It has now become a significant need as these five pillars have collectively pushed the motor insurance market into its current hyper-growth trajectory. Robust regulation, innovation, legislative enforcement, and digital enablement are ensuring continued growth for years to come.
Dhirendra Nalin Mahyavanshi is the Chairperson MD & CEO of Turtlemint. Views expressed are the author's personal.