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

Avoiding the Bermuda Triangle of Data

Handled poorly, questions around data ownership, data quality and data security can sidetrack big data conversations and alienate business stakeholders.

Global Supply Chain, Local Problem

As a technology provider, your client’s ability to deliver products and services to their customers, when and where they need them, is at the heart of their business success.

Legacy Systems Are Increasingly a Competitive Handicap

Legacy systems, while reliable, increasingly hold insurers back, a new study finds

Five Reasons to Software-Define Your Operations

It may be possible to provision key services with the click of a mouse, but benefits go well beyond that.

3 Policy Admin Conversion Considerations

Insurers would be wise to learn these lessons before formulating a strategy to convert policies to a new policy administration system.

From Her to Watson, and What’s Next?

Imagine a learning system that can replace the performance of your best employee to provide the same level of support across the organization.