How much is the car insurance industry worth? 2026

Car insurance industry statistics

The National Association of Insurance Commissioners (NAIC) calculates the average expenditure per insured vehicle in the U.S., which represents the estimated amount that consumers in a state spend on auto insurance. This calculation assumes that all insured vehicles have liability coverage but not necessarily collision or comprehensive coverage.

National average expenditure 2017-2021

According to the NAIC latest estimates, the combined average premium in the U.S. was $ 1,189.42 in 2021. The combined average premium is an insurance policy that includes all three coverages, namely liability, comprehensive and collision coverages.

National combined average premium 2017-2021

To assess the affordability of personal auto insurance, the Insurance Research Council (IRC) calculates the ratio of the average auto insurance expenditures to the median household income. This ratio represents the percentage of household income dedicated to auto insurance payments. According to a 2022 IRC study, the five least affordable states for personal auto insurance included the following:

• Louisiana (3.0%)
• Florida (2.4%)
• Michigan (2.3%)
• Georgia (2.2%)
• Mississippi (2.2%)

On the other hand, the five most affordable states for personal auto insurance were as follows:

• Hawaii (1.0%)
• New Hampshire (1.0%)
• North Dakota (1.0%)
• Maine (1.1%)
• Vermont (1.1%)

Market size

In 2023, the auto insurance industry's market size in the U.S., based on total revenue, reached $353.3 billion. The industry exhibits moderate market share concentration, with the leading four companies accounting for 40% to 70% of the industry's revenue.

Automotive insurance industry employment

The latest data from the U.S. Bureau of Labor Statistics (BLS) as of May 2022 provides employment estimates for  insurance appraisers of auto damage, according to the BLS classifications. Notable national and state specifics include the following:

• Nationally, the industry employed 11,430 insurance appraisers (this estimate does not include self-employed workers).
• The top three states with the highest numbers of employed auto insurance appraisers are Texas, California and Florida.
• At the national level, the mean hourly wage was $34.42, while the mean annual wage was approximately $71,600.
• The states with the highest mean annual wages for auto insurance appraisers include New York, New Hampshire, Massachusetts, Hawaii and Connecticut, ranging from about $90,800 (New York) to $83,200 (Connecticut).

Auto insurance industry by state

The NAIC notes that car insurance rates are mainly determined by the cost insurers incur from paying claims. Certain states’ characteristics play a role in determining insurer loss costs and can influence policy prices. Therefore, consideration should be exercised when comparing auto insurance prices between states.

As previously noted, the average expenditure is the estimated amount that consumers typically spend on auto insurance. The NAIC calculates average expenditure assuming all vehicles have liability coverage, but not necessarily collision or comprehensive coverage.

The top five states with the most expensive auto insurance in terms of average expenditure are New York, Louisiana, Florida, Rhode Island and New Jersey. The five least expensive states include North Dakota, Maine, Iowa, Idaho and Wisconsin.

On the other hand, the combined average state premium for each insured vehicle is determined by adding together the average premiums for liability, comprehensive and collision coverages. Based on the latest estimates by the NAIC, the top five most expensive states in terms of combined average premium policies include Louisiana, New York, Rhode Island, Florida and New Jersey. The least expensive states include Maine, North Dakota, Wisconsin, Iowa and Vermont.

Could electric cars affect the auto insurance industry?

In 2023, electric vehicle (EV) sales in the U.S. experienced a 50% increase over the previous year. More than 1.4 million EVs were sold, bringing the total number of EVs in the U.S. to more than 4 million. Automakers are transitioning from internal combustion engines to electric vehicle production, driven by increasing consumer demand and government incentives. This shift aligns with the Biden-Harris administration's goal for EVs to constitute at least 50% of new car sales by 2030.

Currently, EV premiums per vehicle are higher than those for internal combustion engine (ICE) vehicles, as repair and replacement costs are higher for EVs, and there is a shortage of experts with specialized knowledge. However, according to a 2023 EY report, as the number of EVs increases, the cost gap between EV and ICE insurance premiums is expected to narrow. The report also points out that by 2035, direct premiums written for EV policies are projected to reach about $84 billion. This will represent a 20% decrease in ICE vehicles' contribution to the personal auto premium pool.

Future projections

According to an EY-Parthenon study, the rise of EVs, autonomous vehicles (AVs) and shared-mobility services, along with an increase in telematics data on drivers’ behaviors and evolving consumer expectations will reshape the auto insurance industry. These changes are set to redefine how auto insurance is distributed, priced and underwritten, posing challenges to the profitability of traditional insurance models. Furthermore, these shifts will open opportunities for new entrants, such as vehicle manufacturers, to compete by using telematics data and their direct relationships with consumers to generate new revenue streams.

Mordor Intelligence predicts that the auto insurance market in the U.S., in terms of direct written premiums, will grow from $360.7 billion in 2024 to $453.8 billion by 2029. This represents a compound annual growth rate of 4.7% during this period.