Celent Says

Another View on the Future of Auto Insurance

Donald Light
Insurance Experts' Forum, January 10, 2013

PwC has just published an interesting and thoughtful paper on, “The Reshaping of Auto Insurance.” The paper describes the possible impact of various on-board technologies (automatic braking, telematics, etc.) on auto losses and the longer term potential for changes in auto insurance business models.

Here are a few Celent comments:

It is true that changes in frequency, and especially severity, of motor vehicle accidents will not drop overnight. But the PwC paper looks only at “on-board” technologies. By doing so, it ignores the potential impact of automated traffic law enforcement (e.g. speeding and red light cameras). Depending on the political will (and desire for revenue) of state and local governments, these technologies may have a quicker and more dramatic impact than on-board technologies.

There is also a potential incentive for governments to mandate vehicle-to-vehicle (V2V) communications as a way of increasing the carry capacity of roadways, and avoiding costly construction—plus, arguably, it is a green technology.

If and when liability for many accidents shifts to the manufacturers of the automobiles (and/or the on-board equipment), it is likely that the frequency of accidents will be significantly lower, leading to lower losses, and lower premiums for auto insurers.

So change is coming for auto insurers in terms of business and operating models. The big question is how quickly.

This blog has been reprinted with permission from Celent.

Donald Light is a senior analyst in Celent's insurance practice, and can be reached at dlight@celent.com.

Readers are encouraged to respond to Donald using the “Add Your Comments” box below.

The opinions posted in this blog do not necessarily reflect those of Insurance Networking News or SourceMedia.

Comments (0)

Be the first to comment on this post using the section below.

Add Your Comments...

Already Registered?

If you have already registered to Insurance Networking News, please use the form below to login. When completed you will immeditely be directed to post a comment.

Forgot your password?

Not Registered?

You must be registered to post a comment. Click here to register.

Blog Archive

Emerging Technology: From Insurance Challenge to Opportunity

We are now entrenched in a digital revolution that is powered by these maturing and emerging technologies.

How Allstate Puts Tech Investment in Motion

CEO Tom Wilson and other execs provide a window into how big insurers take digitalization front-and-center.

How Insurers Can Develop Thoroughly Modern Mainframes

The user experience can make or break an application. Here are five ways to measure whether itís positive or negative.

The Peer-to-Peer Economy and the Uberization of Insurance

Insurance is about risk sharing, so what better model to bring in technology and make that risk sharing as efficient and effective as possible?

Rethinking Commercial Lines Underwriting Automation

The value an insurer can achieve from the powerful combination of a modern policy system and a complete suite of advanced underwriting solutions will far outweigh any effort involved.

Students are Pushed to Look Past Obstacles, and so Should We

Student teams, in the space of a few weeks, developed a variety of fresh ideas leveraging unique technologies that could help build products and services for insurance customers.