Did you know that motor insurance makes up roughly one third of the total global insurance premiums taken by insurers?
Did you know that driverless cars are due to bring accident rates on the worlds roads down by 99% ? (If countries and road systems were to fully implement driverless vehicles).
The vehicles will be on the streets of our towns and cities sooner rather than later, the only thing stopping them is legislation, the technology is ready.
Therefore basic mathematics points towards the insurance market taking a huge hit in the coming years. There isn't a glowing silver lining either, the claims that will likely occur involving driverless vehicles will be system related, 3rd party hacking or breakdown, usually low frequency events but high pay out, meaning prediction and pricing will be wayward for at least the first 3 years.
While this may mean (in a fair world) super low insurance premiums for driverless car owners, what happens to those of us stuck in the Stone Age with our steering wheels and brake pedals? In theory, the less risk on the road, the lighter the premium required, but if driverless cars aren’t crashing, but driven vehicles are, you could be right to bet money on the insurance market loading the drivers premiums.
It's a bit of a creeping thunderstorm on the horizon, yet most Insurers I have spoken to seem to have their heads in the sand, perhaps hoping that adoption of the vehicles will be slow or unpopular.
This of course isn't the only wave set to crash on the insurance industry. If you sat on the crest looking back to the ocean you'd see ripples, turning into waves like blockchain, disruptive insurtech, Ogden rates, commission versus fee and Cyber Liability.
All this adds up to a turnkey moment for the insurance industry, like none it has ever seen before. Banking sat through these changes with the dawn of online banking even solicitors have had to move with the times. So how does the insurance market react? Some have started investing in the start-up market - Aviva's Garage project being a great example while others are investing in new systems like AIG's blockchain initiative.
I've got my own idea however, which to most in my industry would consider bizarre at best and madness at worst. Invest in innovation, push for the new and most importantly, recruit youth and tech. The well worn saying that "you fall into the insurance industry" is not good enough anymore. We need to make insurance appealing to those who can change it, those who have new ideas and will change the industry from within, rather than having it dissolved from the outside.
All this adds up to a major shift in the way, insurance is written, sold and consumed. It's also going to start very soon, so keep your eyes peeled for those first cracked facades on the faces of the global brokers and insurers as they start to feel the burn of the new.
Further reading: Lemonade, Cuvva, Brolly, Google Cars, Zhong An, Aviva Garage.
Tristan Antrobus-Holder
Client Relationship Manager - James Hallam
Silicon Canal Ambassador
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