Important for car insurers: the mobility of the future

The Coronavirus has strongly impacted us. We have reduced our contacts, worked from our home offices, shopped online and changed our mobility habits. We now travel fewer miles and use different methods of transport than we did before. But what will the mobility of tomorrow look like? After about two years of COVID-induced abstinence from live events, the adesso insurance solutions auto team was allowed to participate in the Business Forum 21 in Cologne this year, where they had the opportunity to see for themselves where things can go in terms of mobility.

 

A wide variety of topics were discussed during the various technical presentations. From classic facts and figures to making the insurance industry more agile and special equipment on demand, there was certainly something for everyone. Particularly interesting: the trends in mobility. These trends can be broadly grouped into four categories, each of which offers different advantages for insurers.

 

Connected cars

As the term suggests, vehicles can be networked. The vehicle communicates via the Internet with other vehicles of its kind and exchanges information about speed, braking and direction of travel. The purpose is to avoid collisions.

This data is extremely interesting for insurers. Similar to the way telematics is used, this data can be used for pricing. However, the advantage over telematics is that separate hardware or apps are no longer needed to obtain the data. But there are certain challenges that come along with this amount of data. As Jawed Barna (Member of the Board of Directors of the Zurich Group) said, "Data is only worth its weight in gold if you have learned how to deal with it and how to use it to develop solutions for customers."

Autonomous driving

How nice it would be to get in your car, type in a destination and sit back and let your car do the driving. What was once considered a fantasy is becoming more and more of a reality. The technology is highly complex and there are still many legal hurdles involved. Nevertheless, the topic continues to gain momentum.

In Munich, Nio Robotaxis will soon be driving fully autonomously through the city this year. With its Drive Pilot, Mercedes is the first manufacturer in Germany to be allowed to operate highly automated driving vehicles on German roads. In this case, drivers can temporarily turn their attention away from the task of driving and monitoring traffic and let the car do the driving. However, this system is only approved for use on highways and up to a maximum speed of 60 km/h.

But what does this mean for insurers? As a result of the use of driver assistance systems, the frequency of motor vehicle insurance claims has been falling in recent years. This trend has been further enhanced by self-driving vehicles. However, these vehicles are many times more expensive, which means that the average claim amount will continue to rise in the coming years.

Car sharing

In 2021, there were 10.1% fewer new registrations compared to 2020, according to the German Federal Motor Transport Authority (KBA). What used to be considered a status symbol is becoming increasingly less important. Many people no longer need or want to own a car. This is in part due to the high purchase price and ownership costs, but also due to sustainability reasons. Especially in big cities, there are more and more users of subscription or sharing models.

The very thing that offers added value for users is a major disadvantage for insurers. Car sharing reduces the potential customer base in the auto insurance industry. Competition for existing and new risks is increasing. To win customers, insurers must differentiate themselves from their competitors through service and performance.

 

Electrification

Although conventional drive systems (internal combustion engines) continue to account for the majority of registered vehicles, the number of electric vehicles has been growing steadily.
The number of newly registered all-electric passenger vehicles (BEVs) has almost doubled compared to 2020. Their share has risen from 6.7% to 13.6% (source: KBA). The trend is thus clearly moving in the direction of electric cars.

This poses new challenges for insurers. In the event of a claim, new cost items arise, such as battery diagnostics, battery storage costs or the disposal of contaminated fire extinguishing water. Auto repair shops must also be specially qualified and equipped. All of this, of course, has an impact on the average claim amount.

Changing user behavior

It's not only mobility trends that are driving the insurance industry. The behavior and demands of users also pose many challenges. Tobias Schmidt (Google Germany GmbH) said, "During the pandemic, the behavior of users changed even faster.

There has been (and still is) a lot of online buying in recent years. If a product is not to the purchaser's liking, it is simply returned. You can quickly and easily get everything you need online. Many users have had positive experiences with services like Netflix and Amazon. These experiences are projected onto other areas of life, including the insurance industry. Insurers are expected to be available 24 hours a day, 7 days a week, preferably online, and without much hassle.

Society is becoming ever more closely networked and in constant interaction via social media. If something doesn't work very well, a complaint can be made quickly via Facebook or on other social media sites. The complaint and also the response to it are easily accessible to everyone. This puts a new focus on the type and speed of the response, including for insurers.

But what is all this doing to the insurance industry? It's clear that insurers must adapt their pricing to these trends and must respond to the accompanying challenges in order to remain competitive. Pricing in the future must therefore be flexible. This could be achieved, for example, with "insurance coverage on demand" or "pay per use" models.
Easy and fast accessibility is also a priority for customers. Insurance services must be adapted to the customer's needs and be accessible via a wide range of channels, without major hurdles. If this succeeds, it can create a positive Amazon-style experience.

But how can insurers achieve these results? The cornerstone for the requirements of the future is a modern, flexible IT architecture that can help you meet all these challenges.

Would you like to talk to experts about modernizing your IT? Feel free to contact Karsten Schmitt, Head of Business Development.