What is the future of motor insurance?

What is the future of motor insurance?

What does the future of motor insurance look like? It depends on who you ask.

According to Deloitte, autonomous vehicles are going to play a huge role in the evolution of insurance. Thanks to the safety of self-driving vehicles, insurance premiums could drop as much as 30 percent. With far fewer accidents, risk scores drop. Plus, thanks to AI, insurance fraud could also be mitigated, limiting the payouts to deserving parties.

Swiss Re believes that the future of motor insurance will be usage-based, with half of all vehicles on a UBI plan. Telematics will become commonplace and will be critical to the development of better insurance products.

KPMG notes the importance of insuring self-driving vehicles themselves—and says we must all deal with the philosophical question of who should be at fault when a self-driving car has an accident: the car or the driver?  

The opinions are certainly widespread, but here are a few things we think everyone can get behind for the future of motor insurance.

Automation

Automation is synonymous with any industry moving forward, but it’s especially vital for insurance as so many aspects of the industry have been resistant to change.

For many insurers, filing claims is still a highly manual process. This is because they lack an efficient, clear way of organizing and processing data. However, this won’t be the case for long. According to McKinsey, 50 percent of all claims will be automated by 2030.

It’s already begun. At Inaza, one of our value props is developing better fraud detection for insurers using telematics. Fraud detection can be a lengthy process, but AI can help automate much or all of the process. It’s no surprise that insurance fraud detection is shaping up to be a $28 billion market globally by 2031.

The automation isn’t just on the insurer's side either. For drivers, setting up insurance can be a lengthy and complicated process. However, thanks to automation, insurance will be as easy as turning on your phone. Solutions like embedded insurance are popping up everywhere and are easier to access and implement. Temporary insurance can work for everything from a week-long car rental to an hour-long motor scooter rental.

Safety

The future of motor insurance is, above all else, safety. Both insurers and drivers have a lot to gain from safer roads, and much of insurtech is geared at producing technology that decreases the risk in meaningful ways.  

One of the most impactful ways that safety is being transformed is in finding ways to better understand the threats to drivers on the road and warn them in real-time. AI risk engines, like Inaza’s proprietary technology, help predict road accidents before they happen. By looking at historical data, weather conditions, traffic patterns, and more, AI can provide safer routes to safeguard drivers.

AI can also warn drivers about potentially unsafe behavior, especially given certain situations, like a road that is especially dangerous at night if you’re speeding, or a bridge that has been known to freeze over in the wintertime. Insurers can even incentivize drivers to follow these tips and drive safer, by gamifying their insurance.

Cost-efficiency

The future of motor insurance will be more cost-efficient, for both drivers and insurers. According to IMS, this is because it’s easier for both the insurer and consumer to sign up for things like usage-based insurance thanks to telematics technology.  

Prior to how telematics is today, you needed black boxes that tracked car data. But this was expensive and inconvenient for both parties. This means the costs go down for providing services like usage-based insurance.

And, as we covered earlier, drivers are safer with better technology. Incentivized and advised on safe driving, there will be fewer claims and less risk in aggregate, meaning that both drivers and insurers save. With lower costs for issuing products like usage-based insurance, there is also the opportunity to insure the uninsured right now, leading to more opportunities for insurers and more protections for individuals.

The future of motor insurance started yesterday

Many of the “futuristic” aspects of motor insurance have actually been around for quite some time. For drivers, there are insurtech opportunities to save money and have a safer better overall experience. For insurers, there are chances to create more successful, superior products and services for customers, while streamlining internal operations.

If you’d like to know more about how we can help you build out your insurtech opportunities and capture the future of insurance, let’s get in touch.

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