What’s next for vehicle insurance?
Autonomous driving, connectivity, and of course, electrification: those tech trends will change the course of vehicle insurance. Full autonomy may be a way off, but the latter two have an impact.
The key to everything is data. OEMs will provide increasingly sophisticated data on driver behaviour and vehicle performance via embedded telematics. That will strengthen the role of OEMs in the insurance arena and provide traditional insurers with additional ways to optimise profit and loss. Some examples:
This type of usage-based insurance charges premiums only on the distance and time a connected vehicle is in use. Rewarding low-mileage use offers a positive incentive to both fleets and drivers for not driving their cars. Example: Metromile, a U.S.-based pay-per-drive insurer, claims its customers save up to 47% compared to traditional insurers.
Using data analytics, providers can quickly locate parts recycled from other vehicles that have been damaged. This is a more sustainable and cost-effective alternative to simply using new parts. Example: Rivus Fleet Solutions (formerly known as BT Fleet Solutions) in the UK saves about £1 million per year and reduces its carbon footprint by 2,500 tons per year by using salvaged parts.
EVs (and their parts) are generally costlier than ICEs (and their components), translating into higher insurance premiums. However, the difference is often minimal, and EVs typically require less maintenance than ICEs. So the advantage might soon reverse. Tesla Insurance, the company’s own insurance offer, is only available in California but may soon be coming to the rest of the U.S. (and Europe).
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