The disruption ahead for the motor insurance market. By David Williams, Managing Director, Underwriting & Technical Services, AXA Insurance.
Would you send your children to school in a vehicle without a driver? Connected and autonomous vehicles are coming, like it or not. The technology is developing at a tremendous pace and with predictions of 100% of vehicles on the roads being connected by 2025, and 75% autonomous only 10 years later, we need to start planning and understand the implications now.
Governments around the world are keen to encourage the adoption of this new technology, and to exploit the economic opportunities it presents. Insurers like AXA support it because it has the potential to result in fewer people being killed and seriously injured. The fact autonomy is probably the biggest disruption ever in the motor insurance market, a market worth over $800bn globally, is another reason to get involved and help shape the future of mobility rather than being surprised by it – and I believe other businesses can learn from our approach.
Spotting a gap in our understanding of such disruptive technology, we decided to get involved. That simple wish led to us becoming integral members of the Venturer Consortium, then UK Autodrive, Flourish, Capri, and finally (for now!) Robopilot.
Our responsibilities have covered the insurance and legal aspects of Connected & Autonomous Vehicle (CAV) development. I think we have done that well, working with legal partners appropriately (the whole consortia process reminds you that working together and not thinking you need to do everything yourself produces better results). We have asked the challenging questions, described potential products for different scenarios, and written a few insurance policies!
Our involvement, bolstered by the ABI autonomous driving group, has given us access to those in the corridors of power in Westminster. I know we have helped shape the Autonomous & Electric Vehicles Act, producing something the world can see and maybe look to for hints to shape their own regimes, but also more importantly that protects the general public and should give comfort and confidence that these vehicles will operate in a safe and fair regime going forward.
A lot of focus has been on understanding the risks and issues to help UK Government progress the Automated & Electric Vehicle Act. One obvious area to look at is the aspects it doesn’t cover, and one we deliberately ‘overlooked’ was Data Provision & Ownership.
Beyond the obvious need for information surrounding any accident, to promptly deal with a claim and help establish final liability, data will be the thing that fuels a potentially vibrant ecosystem of aftermarket providers, enabling entrepreneurial firms to offer related services. That’s what they do now, it keeps the OEMs on their toes, competition delivers better pricing, and overall the customer gets a better offering, with more variety, at a cheaper price.
If we allow just the motor manufacturers to have this information, then that entire ecosystem – something that makes the motor sector as vibrant and thriving as it currently is – will be stifled, existing firms will go out of business, and new opportunities will be lost.
The data ecosystem discussion leads neatly into trying to think what opportunities there might be for insurers in the future. If I was a mono line private motor insurer at the current time, I would be very worried. With much safer roads, less accidents and a different insurance model driven by changing ownership patterns and mobility as a service, conventional motor insurance premiums overall will plummet.
I say from an AXA perspective that this won’t happen overnight, and we can simply move our people and our capital on to the many other lines that we write, but the reality is that every insurer should be looking to see what opportunities there may be to replace that lost motor income with other products.
David Williams will be speaking at SHIFT Automotive, which is taking place from 10-11 September 2019 in Berlin, in conjunction with IFA, the world’s leading trade show for consumer electronics and home appliances. To book your ticket or enquire about being an exhibitor visit: https://b2b.ifa-berlin.com/IFA/ConventionsConferences/Shiftautomotive/