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THE FUTURE OF XSURANCE
#insurancetelematics
POSTED ON:
November 03, 2021
TAGS:
Insurance telematics,
cyber risk, health risk, financial stability risk
cyber risk, health risk, financial stability risk
Thinking of industry events to visit in 2021, we still have to choose from those happening on the Internet. Last week, NYIA invited us to participate in the webinar “What the Future May Hold: Changing Landscape and Insurance Models.”
As telematics experts, we participated in a panel discussion with Deb Zawisza from Aite-Novarica Group, David Gritz at InsurTech NY, and Kayvan Farzaneh from Cape Analytics. The talks mostly confirmed things we were writing about in the past months, but also gave some valuable insights.
Spoiler: some risks that we haven’t even considered may play a significant role in changing the insurance industry.
As telematics experts, we participated in a panel discussion with Deb Zawisza from Aite-Novarica Group, David Gritz at InsurTech NY, and Kayvan Farzaneh from Cape Analytics. The talks mostly confirmed things we were writing about in the past months, but also gave some valuable insights.
Spoiler: some risks that we haven’t even considered may play a significant role in changing the insurance industry.
What do we face now?
⛈ Climate change
No, it’s not about glacier melting that will sink the humanity and insurance industry. Here’ we mean the transformation of the global energy sector from fossil fuels to low-carbon energy sources. More an opportunity, than a risk, as we see it.
Considering that insurance covers most of the vehicles, it can drive the global shift forward by patronizing e-cars, diligent drivers, and reasonable car users. Insurance saving the day, instead of draining money, would you believe!
⌨ Cyber risks
The pandemic boosted the digitalization of nearly all economic activities. Even the conservative insurers turned their attention to telematics and tried to realize the value of vehicle data.
But when there’s a data source, there will be those willing to compromise it. It’s not about the rise of the machines, let’s leave it to Boston Dynamics. It’s about personal data staying personal.
For the Draivn team with a mission to democratize the use of telematics data and make it universally accepted, addressing this issue becomes critical for moving forward.
❤️Health risks
Pandemic and post-pandemic scars, aging, young generation mental problems will increase pressure on healthcare service providers and insurers around the world.
Yes, it’s not connected to vehicle insurers directly. But consider all mobility and micro-mobility assets that these people use, and imagine how mental and physical conditions can influence their usage.
⚖ Financial stability risks
The risk of a tech bubble burst, in particular. And this is a tricky thing. On one hand, we should keep investing in technology and innovation to face tomorrow's risks. On the other, our appetite should be somehow adequate.
To sum it up, we have some news for the insurers:
Bad news: we are in the spin cycle. As technology penetrates our daily lives, it changes it, which derives new risks. And we introduce new technologies, that mitigate the existing risks but give birth to the new ones. This fight is never over.
Good news: insurance will hardly disappear. Instead, it will be moving on the very edge of dealing with all the emerging and traditional risks, which are not passing away.
Considering all these risks and the state of technology right now, we can consider a few trends that will help insurers survive and adapt to the new world.
Trends
✅ From products to services. By 2025, new services and models will generate 30% of insurers’ revenue. Make sure you have something to offer at the tipping point.
✅ From legacy to innovation. We know the insurance industry as a rather conservative family where high profits coexist with the lack of innovation. These days the paradigm is also changing – an ever-shifting environment, customer needs, and insuretechs put insurers under pressure.
✅ From mass-market or commodity to personalization. And this shift is only possible with big data at hand.
Opportunity
Considering the above, the insurer seems to be a brake pad in a three-piston caliper. These three pistons – risks, trends, and competitors – put the insurer under pressure, but make it super-effective.
After studying the risks, trends, and emerging competitors to conventional insurers, we believe that the biggest opportunity lies in ML and Data Science. These techs will allow insurers to update risk models, personalize service portfolios, and create new products. ML, IoT, Big Data are no longer buzz words, but a competitive advantage. Probably the most powerful.
As far as mobility is concerned, we see the biggest potential in adopting telematics for fleets and commercial lines, as it has already captured B2C. Excited, we watch over insurtechs like Metromile, traditional insurers, and even OEMs adopting telematics and building propositions on top of big data.
Still, commercial lines seem to lag behind, except for two things:
❗ The balance of personal and commercial premiums will change from 80/20 today to 40/60 by the end of the decade. Considering that most of these fleets are already connected to FMS, the future of B2B mobility is enabled by fleet management and telematics.
❗It’s obvious that commercial lines will follow the dynamics of telematics adoption in B2C and first movers will achieve the biggest success. While others will probably miss the bus, as Geico already did in B2C.
But again, the main challenge here is to change the mindset. Telematics or any other technology itself does not do the job – consistent approach and building the capability does.
⛈ Climate change
No, it’s not about glacier melting that will sink the humanity and insurance industry. Here’ we mean the transformation of the global energy sector from fossil fuels to low-carbon energy sources. More an opportunity, than a risk, as we see it.
Considering that insurance covers most of the vehicles, it can drive the global shift forward by patronizing e-cars, diligent drivers, and reasonable car users. Insurance saving the day, instead of draining money, would you believe!
⌨ Cyber risks
The pandemic boosted the digitalization of nearly all economic activities. Even the conservative insurers turned their attention to telematics and tried to realize the value of vehicle data.
But when there’s a data source, there will be those willing to compromise it. It’s not about the rise of the machines, let’s leave it to Boston Dynamics. It’s about personal data staying personal.
For the Draivn team with a mission to democratize the use of telematics data and make it universally accepted, addressing this issue becomes critical for moving forward.
❤️Health risks
Pandemic and post-pandemic scars, aging, young generation mental problems will increase pressure on healthcare service providers and insurers around the world.
Yes, it’s not connected to vehicle insurers directly. But consider all mobility and micro-mobility assets that these people use, and imagine how mental and physical conditions can influence their usage.
⚖ Financial stability risks
The risk of a tech bubble burst, in particular. And this is a tricky thing. On one hand, we should keep investing in technology and innovation to face tomorrow's risks. On the other, our appetite should be somehow adequate.
To sum it up, we have some news for the insurers:
Bad news: we are in the spin cycle. As technology penetrates our daily lives, it changes it, which derives new risks. And we introduce new technologies, that mitigate the existing risks but give birth to the new ones. This fight is never over.
Good news: insurance will hardly disappear. Instead, it will be moving on the very edge of dealing with all the emerging and traditional risks, which are not passing away.
Considering all these risks and the state of technology right now, we can consider a few trends that will help insurers survive and adapt to the new world.
Trends
✅ From products to services. By 2025, new services and models will generate 30% of insurers’ revenue. Make sure you have something to offer at the tipping point.
✅ From legacy to innovation. We know the insurance industry as a rather conservative family where high profits coexist with the lack of innovation. These days the paradigm is also changing – an ever-shifting environment, customer needs, and insuretechs put insurers under pressure.
✅ From mass-market or commodity to personalization. And this shift is only possible with big data at hand.
Opportunity
Considering the above, the insurer seems to be a brake pad in a three-piston caliper. These three pistons – risks, trends, and competitors – put the insurer under pressure, but make it super-effective.
After studying the risks, trends, and emerging competitors to conventional insurers, we believe that the biggest opportunity lies in ML and Data Science. These techs will allow insurers to update risk models, personalize service portfolios, and create new products. ML, IoT, Big Data are no longer buzz words, but a competitive advantage. Probably the most powerful.
As far as mobility is concerned, we see the biggest potential in adopting telematics for fleets and commercial lines, as it has already captured B2C. Excited, we watch over insurtechs like Metromile, traditional insurers, and even OEMs adopting telematics and building propositions on top of big data.
Still, commercial lines seem to lag behind, except for two things:
❗ The balance of personal and commercial premiums will change from 80/20 today to 40/60 by the end of the decade. Considering that most of these fleets are already connected to FMS, the future of B2B mobility is enabled by fleet management and telematics.
❗It’s obvious that commercial lines will follow the dynamics of telematics adoption in B2C and first movers will achieve the biggest success. While others will probably miss the bus, as Geico already did in B2C.
But again, the main challenge here is to change the mindset. Telematics or any other technology itself does not do the job – consistent approach and building the capability does.
What shall we do today?
Or better say, what CAN we do right now:
1️⃣ Increase the awareness of new emerging risks within broader groups of stakeholders.
2️⃣ Encourage partnerships at all levels.
*E.g., inter-governmental environmental policy alignments are necessary to open new opportunities and enable the private sector to take more risks in leading the climate mitigation agenda.
3️⃣ The private sector, insurers, and governments need to work more closely together on cyber security.
4️⃣ Speaking about mobility, the main risks are associated with cyber-security of the increasingly connected world and autonomous driving.
5️⃣ One of the biggest challenges is risk-shifting from a driver to a variety of stakeholders.
*All stakeholders in the future of mobility – auto manufacturers, software developers, parts manufacturers, internet service providers, road construction companies, local governments responsible for infrastructure – must recognize that things are changing as liability shifts.
6️⃣ Insurers must recognize the shifts that are already occurring, embrace the role as an enabler of innovation, and adapt. The lines between personal risk and commercial risk are blurring. Addressing the complex challenges of insuring the autonomous vehicle market requires a collaborative approach.
Or better say, what CAN we do right now:
1️⃣ Increase the awareness of new emerging risks within broader groups of stakeholders.
2️⃣ Encourage partnerships at all levels.
*E.g., inter-governmental environmental policy alignments are necessary to open new opportunities and enable the private sector to take more risks in leading the climate mitigation agenda.
3️⃣ The private sector, insurers, and governments need to work more closely together on cyber security.
4️⃣ Speaking about mobility, the main risks are associated with cyber-security of the increasingly connected world and autonomous driving.
5️⃣ One of the biggest challenges is risk-shifting from a driver to a variety of stakeholders.
*All stakeholders in the future of mobility – auto manufacturers, software developers, parts manufacturers, internet service providers, road construction companies, local governments responsible for infrastructure – must recognize that things are changing as liability shifts.
6️⃣ Insurers must recognize the shifts that are already occurring, embrace the role as an enabler of innovation, and adapt. The lines between personal risk and commercial risk are blurring. Addressing the complex challenges of insuring the autonomous vehicle market requires a collaborative approach.
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