Published with permission from Vero Insurance New Zealand.
Right now, we’re on the cusp of a major shift in the way humans get around. Insurance companies are even making a change from talking about ‘car insurance’ to talking about ‘mobility ecosystems’, and planning for a future where transport options and the way we purchase them will look quite different.
What sometimes goes unnoticed in the last 30 years, is the vehicles we drive have already changed dramatically, and the impact this has on today’s car insurance market.
A hidden shift in our cars
Right now insurers and consumers are sitting on the tipping point between the current and future states of the mobility industry, and the changes of the last twenty years have created a new dynamic, which insurers will need to respond to.
“The most epic change in cars is how much technology there is everywhere.” – The Journal
The increase of new technology has allowed us to become more comfortable in our cars, but it has also connected more parts of our vehicles together. This means even minor damage is more complicated and expensive to repair. Small scrapes or collisions could require re-calibrating sensors, re-connecting wires, re-tuning vehicle computers and installing new airbags.
Vehicle technology, like reversing cameras and parking sensors, are designed to keep us safe, but they don’t combat the rising amount of vehicles on our roads. In addition, people are taking advantage of digital platforms to turn their car into an income-generating asset, renting out their car or their services as a driver. All these things affect the traditional structure of insurance policies, and increasing the cost of claims.
The future of mobility – ACES
“Given the widespread understanding that game-changing disruption is already on the horizon, there is still no integrated perspective on how the industry will look in 10 to 15 years as a result of these trends.” – McKinsey & Company
The possible future of transport options can be summed up in four letters: ACES – Automation, Connectivity, Electrification and Sharing.
Vehicle manufacturers and software companies are in a race to produce the first, safest and most viable fully autonomous cars, while other businesses develop and advance vehicle battery technology, wireless induction charging, ride-sharing platforms and more.
The future of cars, vehicle ownership and vehicle insurance will likely look very different, and the changes may affect customers and businesses alike, from a range of industries, ranging from insurance to healthcare, taxis to petrol stations.
Rising costs accelerate the future
In the mean time, we continue to battle the rising cost of motor vehicle ownership. Our cars may be more comfortable, but the cost of fuel, taxes and the growing frequency and cost of car insurance claims are all adding to the expense of running a car.
Insurers are looking for ways to bridge the gap between insurance products which have hardly changed in a century, and the technological advances of today and the future. They need to adapt their products, both to help control insurance premiums, and to find new ways to protect a different style of vehicle ownership and the sharing economy. More importantly, insurers need to have one eye on the future of the mobility industry.
One thing is certain – rising costs are likely to accelerate our appetite for change.