A road to nowhere?
Automation of transportation will be a gradual and steady process. To see an effect on the insurance world, we do not need to wait for driverless cars, and it will take a long time before driverless cars are allowed on the majority of roads, says Fabrizio Brenner, VP at SwissRe, who will reveal more on this issue in February at the 2nd Annual Motor Insurance Summit.
Clearly, the change is inevitable, with some studies suggesting that market value might drop as much as 80% by 2040 thanks to the cumulative effect of new technology reducing the number of accidents, advanced data helping track driver behaviour and car sharing slowly edging in on traditional ownership. This raises critical questions for the insurers.
The reality of applying telematics:
Connected insurance is definitely one of most relevant trends, with a potentially big impact on the business profitability.
Telematics is rapidly making its way into the market, proving beneficial for both customer and insurer. Mainly perceived as a safety game-changer, telematics make it possible for insurers to enrich their auto insurance value proposition by adding services built upon data. These services also increase the number of interactions with the client, creating a richer connection and improving customer satisfaction.
Italy is currently far ahead in adopting telematics with more than 70% of Italians showing a positive attitude to auto telematics insurance solutions, and 26 different insurance carriers in the Italian market are currently offering this product. Clearly, telematics are no longer a niche market but going mainstream. Will others soon follow?
Will the new technologies positively affect driver behaviour?
Definitely. At least, most of the studies say so. Consumers say they are willing to pay more for improved safety features, and at least 65% would pay to retrofit their current vehicles with accident-reducing technology.
Fabrizio clarifies that “ADAS features and autonomous driving technology are disrupting the motoring world and making driving much safer. Fewer accidents will likely lead to lower expected losses for insurers, which in turn should bring down overall motor insurance premiums.”
So far only three known incidents involving telematics have been reported, and not all have been actually directly caused by their malfunction
What's the impact on legislation?
According to Morgan Stanley, most consumers say they would support their governments making accident-reduction technology mandatory in all new cars.
Fabrizio further states that: “Adapting legislation to enable driverless cars may be a top priority in many countries due to the many benefits the technology brings; we will probably experience a shift from MTPL covers to Product Liability covers, but this will be gradual and cautious.”
Car ownership vs. carpooling
While we are living in the era of shared economy disrupting traditional business models with apps like Uber, AirBnB or P2P lending, the traditional ownership of cars won't simply disappear from our lives, but indeed will decline.
Morgan Stanley estimates that by 2030, the auto insurance market may be split evenly between personal and commercial; by 2040, that ratio could be 30% personal and 70% commercial.
One thing is for sure: these developments are leading us to a point when the biggest beneficiaries will be consumers. Insurers are the ones who must change by trying to adapt to their needs.
The latest insights, state-of-the art technologies and best practices of Europe's top insurance companies will be all discussed on 16 – 17 February in Rome at the 2nd Annual Motor Insurance Summit.
Visit the event website to find out more:
https://fleming.events/en/events/finance/european-motor-insurance-summit
Sources:
http://insurancethoughtleadership.com/the-new-paradigm-of-connected-insurance/