5% Decline in Driver’s License Holders in Their Teens and Twenties Over Three Years
Focus Needed on B2B Market Expansion
Including Liability Insurance for Autonomous Vehicles and Platform-Based Coverage
As the number of driver’s licenses obtained by people in their teens and twenties has sharply declined, it has been suggested that insurance companies should develop a variety of products-such as motorcycle accident coverage and liability insurance for autonomous vehicles-to protect the profitability of auto insurance.
The Korea Insurance Research Institute made this recommendation on the 17th through its report, "Auto Insurance Response Strategies in Light of Changing Demand Among Young People."
The main reason for the decline in auto insurance demand among young people is cited as weakened vehicle demand due to reduced income.
According to data on auto insurance driver age restriction riders in 2023, the number of policies restricting drivers to those aged 43 or older increased by 1.4 million compared to 2020, while contracts set for all ages or for those aged 21 and older decreased by 455,000.
According to the Korea Insurance Research Institute, the number of driver’s license holders aged 16 to 29 fell by 5%, from 5.18 million in 2020 to 4.92 million in 2023. The number of new license holders is estimated to have dropped by about 26% over the same period.
This is the result of a combination of structural factors, including a declining youth population, an increase in single-person households, and urban population concentration. The number of single-person households under 30 rose by 8% nationwide and by 14% in Seoul during the same period. Typically, demand for personal car use among single-person households is low in areas with well-developed public transportation.
There are also figures showing a decrease in the number of vehicles registered to young people. In 2024, the number of vehicles registered to economically active people aged 15 to 29 decreased by 3.2% compared to the previous year.
The labor force participation rate among young people also turned downward, falling from 49.8% in 2022 to 48.9% in 2024.
The Korea Insurance Research Institute called for flexible product development to respond to market changes. It advised diversifying insurance products based on the sharing economy to enhance the value of obtaining a driver’s license even without car ownership.
It is also possible to consider introducing a rating system in driver-focused short-term auto insurance or car-sharing and rental car insurance, which reflects data such as driving distance and habits, to encourage repeat users to become long-term customers. As shared vehicle consumption increases, it will also be possible to apply customized rates through data linkage between insurers and car-sharing platforms.
It is also necessary to create customized products that cover accidents related to the diverse mobility preferences of young consumers. Insurers should prepare to develop products that cover accidents involving other vehicles, such as motorcycles, in addition to cars, to accommodate consumers who use these modes of transport.
Insurance companies should also prepare for new mobility insurance needs, such as autonomous vehicles and electric cars. The product liability insurance market for electric vehicles, connected cars, autonomous vehicles, and shared mobility should be closely monitored.
For example, the UK insurtech company Zego flexibly offers insurance for various vehicles-including cars, scooters, and motorcycles-tailored to purposes such as personal use or delivery, on a monthly or annual basis.
Researcher Chun Jiyeon said, "Attention should be paid to the potential for expansion in the B2B (business-to-business) insurance market related to mobility, such as product liability insurance for autonomous vehicles and platform-based liability insurance."
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