INSURANCE IN THE NEW MOBILITY ECOSYSTEM

Nowadays, it is not difficult to envisage, even perhaps in the not too distant future, a scenario in which fully autonomous vehicles play an essential role in our day-to-day mobility, especially in densely populated areas. In a fully autonomous driving vehicle, the driver is permanently removed from the equation, as a result of which, for all intents and purposes, we can simplistically state that all responsibility ultimately lies with the vehicle itself and its operating system. The latter autonomously take all decisions related to the journey and must take care of the safety of passengers and the surrounding environment.

Without here getting into an ethical discussion, which is now starting to appear on the agenda, let us imagine the impact that this situation will have on the current business model of insurers and their auto policies. Up to now, they have been centred on the vehicle and based on the ultimate liability of the driver.

As the new models of shared mobility and autonomous driving gradually replace traditional models, profound changes are anticipated, ranging from the potential existence of fewer individually-owned motor vehicles to a drastic fall in the frequency and severity of accidents. Insurers will be forced to rethink their role within the new mobility ecosystem, incorporating into their new business model, in addition to other factors, new sources of risk and liability. They will have to evolve to serve new needs, create new products and use new sales channels to take account of the new scenario.

“Insurers will be forced to rethink their role within the new mobility ecosystem, incorporating into their new business model, in addition to other factors, new sources of risk and liability.”

We are already seeing technological developments such as telematics profoundly changing policies and corresponding premiums. Connected vehicles, for example, can give insurers more accurate information regarding the behaviour of drivers, so that insurance premiums can be adapted according to actual risk rather than perceived risk. In exchange for transparency through the sharing of information regarding his or her driving style, the policyholder may potentially obtain a lower premium and a higher level of customization. In fact, this growing influence of systemic data analysis is so compelling that it is expected that, in a connected world (not just motor vehicles), premiums may be calculated individually based on our behaviour, thus also impacting our life insurance, workmen’s compensation insurance, home insurance, etc.

The growing popularity of vehicle sharing is also creating new models of insurance cover, such as pay-as-you-go. It also opens up new opportunities for the insurer to establish partnerships with mobility operators.

Autonomous vehicles will certainly reduce the frequency of accidents and new types of cover will be required. In the future, those responsible for the design, construction and maintenance of motor vehicles and their software will seek protection against catastrophic losses resulting from any possible failure of any of their components, or the risk of cybercrime.

In an environment where premiums are likely to fall and the types of cover will be quite different from those available today, insurers, like the entire automotive industry, will have to deal with major disruption. However, there will be no lack of data and experience to make informed decisions.

Reference:

** Opinion article originally published in Fleet Magazine paper edition /June 2017 **

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All opinions expressed are my own and not to be associated with my employer or any other organization I am associated with.