Driverless cars to 'significantly change' motor business model
Consumer insurance brands, particularly for motor vehicle coverage, face disruption as tech-led changing market dynamics continue to play a key role in shaping the future of the industry, according to insurance consulting firm Xceedance.
The firm says its informal survey of senior industry executives in Australia found the shift towards autonomous vehicles will impact the motor line, including the possibility of a “significant reduction” in some consumer brands.
“The rise of driverless cars and vehicle manufacturers insuring their own products will change motor insurance business markets,” VP and Country Manager Stephen Browne said.
“This emerging model could shift the need for traditional consumer motor coverage, moving the industry to focus on commercial motor and coverage for classic or specialty vehicles.”
Xceedance says with fewer people owning motor vehicles, insurance will increasingly become tied directly to car manufacturers, usage, and rental companies.
As the insurance landscape evolves, bowing to technology changes, the resulting market dynamic will alter motor insurance business models, the firm says.
“It is highly likely that insurer and manufacturer relationships will result in one insurer providing coverage and services for a particular motor vehicle brand during the life of its vehicles,” the firm said.
“The vehicle manufacturer’s insurer will know each vehicle’s entire history (and the status of every component within the vehicle), as well as the insured value - up to the day it’s worth nothing, or alternatively becomes a classic collector’s item.
“This trend could negate the need for competitive consumer insurance brands, shifting the industry to focus predominantly on commercial motor vehicle insurance and classic or special vehicles.”
The findings of the informal survey are contained in a white paper that also outlines other factors that are driving massive changes in the local insurance industry.
According to the white paper, the other factors are automation, data explosion, rise of underwriting agencies, new insurance roles, predictive claims modelling and hyper-personalisation of insurance.
“Australia’s insurance industry is at the precipice of a significant transformation within the next few years,” the paper said. “It will be unlike anything we have seen in the past.”
Click here for the paper.