The panelists agreed on three primary areas of growth:
- electric vehicles
- autonomous driving
- vehicle sharing
The electric vehicle market has grown substantially, with related impacts in everything from fleets, to sensor-equipped cars, to shared mobility and autonomous driving. As the sector continues its expansion (including not just cars, but also e-bikes, e-scooters, and mass transport), there will be very real consequences for insurers, who now must increasingly consider the impact of different risks, where for example the accident rate could decrease because of all the driver assist technology packed into EVs, yet the cost of damage in an accident would be higher because of the more advanced repairs. Therefore there would be a changing cost structure of damages to electric vehicles, in general and this is an ever evolving space as more data comes in.
Autonomous driving is experiencing incremental, but steady growth as new vehicles adopt more and more autonomous features. Already, these changes are presenting challenges and opportunities for insurers, who must consider liability in an autonomous context. For example, if the autopilot fails or makes an error during a common driving behavior (i.e. staying within a lane), who is actually responsible – the manufacturer, software vendor, insurer or driver?
Changing car ownership models have flourished, with an increase in drivers who aren't owners, but temporary or shared users. As more drivers shift from owning to peer-to-peer or subscription-based models, underwriting implications are certain, putting more emphasis on telemetry and vehicle data collection.
Contributors noted that COVID-19 continues to drive large-scale digitalization across all sectors, including within transportation. Changes brought on by the pandemic have helped create ongoing and fundamental shifts in how we move through the world, including how we get to work. Commuting is one such example – with more people working remotely than ever before, some cities have seen steep reduction in mass transit ridership. Business trips have also become more infrequent (particularly those involving plane travel). Many local city governments are exploring new mobility measures to align with some of these trends, putting emphasis on electrification, alternative vehicles, sharing models and even road reduction as they try to find sustainable ways to adapt to the mobility needs of constituents during the COVID-era.
As people own cars less and rent or share more, panel contributors anticipate big impacts for banking and insurance (currently, approximately 30% of insurance premiums in Europe are for automotive covers). The shifts we are already seeing around vehicle ownership and liability (from individual ownership to managed fleets) will make the issue of access increasingly important to insurers. For example, developing new products and platforms that help insure drivers by the minute or by the hour versus annual, 12-month policies. As a result, customer risk-assessment will also be subject to change as how, where, and when people drive correlates with insurance costs and impacts claims.
Additionally, risk models for both autonomous driven vehicles (including cars, e-scooters and e-bikes) and fleets will almost certainly be a prominent area of exploration for insurers as we move closer to a fully autonomous future. We are also likely to see old and new players competing for the end user – from OEMs to platform providers to fleet managers to insurers. There are a range of related insurance complexities to work through, including those exposures that concern liability (hybrid models: cars driving themselves vs. remote drivers vs. drivers riding in cars with some autonomous function). A change to injury claims, therefore, is also likely, with a decrease in third party liability and an increase in accidental damage liability, as human error is mitigated by autonomous technologies. Finally, data (telemetry, severity, long term exposure) will play a huge role in the future of mobility and financial services.
Panel contributors largely agreed that insurtechs and incumbents continue to have much to learn from one another. Incumbents might begin to take a more proactive approach to the changing market landscape, rather than reactive. Incumbents should also catch up on real time data vs. historical data sets to properly price shorter policies or products which work better for today’s mobility landscape and customers. In that same vein, incumbents should have both the capability and willingness to use technology to adapt and modernize their processes and products.
Conversely, insurtechs can also learn from their more experienced incumbent counterparts, particularly the value of building a trusted and established brand over many years. Adapting to the modern customer and delivering customer satisfaction through the entire insurance journey is another area of focus, including the importance of looking beyond one or two links in the value chain, in exchange for broader, more comprehensive understanding.
The upshot: with so much evolving in the mobility space, and so many dependencies between both worlds, changes within insurance and financial services are all but guaranteed.
Insurers and insurtechs who are learning quickly right now, adapting products and services as markets evolve, will likely be best positioned to succeed when it comes to insuring the people and vehicles of the future. At the end of the day, mobility without insurance is not possible!
For a previous X Day session addressing the topic of Data, please visit this blog article here.