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Market Sizing of Automobile Insurance market revenues in US

Anonymous A asked on May 17, 2018 - 2 answers

How would u approach this ?

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Sidi
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replied on May 18, 2018
McKinsey Engagement Manager & BCG Consultant | Interviewer at McK & BCG for 7 years | Coached 100+ candidates secure MBB offers
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Hi Anonymous,

High Level approach:

1. Segment Automobile market

  • Major segments: private vehicles, commercial vehicles, public sector vehicles (public transport, police etc.), motor bikes
  • Possible sub-segments: large, medium, small vehicles

2. Estimate size of each segment (use drivers such as population/households, etc.)

3. Estimate annual price for insuring each segment/sub-segment

4. Multiply segment sizes with corresponding segment prices and add up the figures

Cheers, Sidi

Vlad
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replied on May 18, 2018
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Hi,

Several steps:

1) Calculating the number of private vehicles

  • Use the number of households in US
  • Average number of cars per household
  • Apply the growth rate (E.g. growth of the economy as a proxy)

2) Calculating the number of Commercial vehicles

  • You can say for example that every 8th or 10th car is commercial based on your observations

3) Calculating the size of the market

  • You can apply the average cost of insurance that the interviewer provides
  • Take into account that the replacement rate for insurance may be more than 1 year in certain commercial cases
  • Don't forget that cars like taxi have multiple insurances (taxi / non taxi mode)
  • You can also segment commercial vehicles further into Trucks, etc

Best

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