Connected cars: a new car insurance market?
Worldwide it is estimated that between 2017 and 2022 connected car sales should triple and represent a market worth more than $155 billion. Safer, more autonomous, more intelligent, these new cars, which run on data and artificial intelligence, promise us ever-more pleasurable travel – and even life – experiences. As an extension of our smartphones, they are integrating increasingly into the customer journey, even becoming means of payment. In short, everything is accelerating… including from insurers as they see these advances as an opportunity to create new products and to forge a new type of relationship with their customers.
Behavioural insurance: The insurance of paying fairly!
“Show me how you drive, and I’ll tell you how much you’ll have to pay.” That’s how we could sum up the promise made to American customers of FORD and its insurance partner NATIONWIDE. With its largely connected models, the American manufacturer was able to promise buyers up to 40% off their car insurance… on condition that they agreed to transmit data on how they drive. Journey times, respecting limits, distances, warning signals in case of fatigue or lane deviation…covered in sensors, these vehicles can analyse and deliver in real time valuable information on drivers’ behaviour; and thus allows insurance rates to be refined as accurately as possible. Launched early this year, the partnership, which also includes the manufacturer Toyota, is still in its infancy. However, it reinforces a fundamental trend based on behavioural insurance in the automotive sector: “Pay as you drive.”
Why are “Pay as you drive” offers on the rise?
Recently, more and more insurers have been developing “Pay as you drive” or “Pay how you drive” insurance packages by installing a connected box on the vehicle; what is innovative here is the “manufacturer-insurance” partnership. This brand new formula just goes to show that, to reinvent itself, the automotive sector must move from competitive mode to cooperative mode, working in synergy with all the players in its market. This is not only a way to accelerate transformation, but also to cope with new competition from the tech giants: like Tesla, who launched its connected insurance offer for its own brand in California at the end of 2019.
Crédit photo : iStock, Ford, Globalfleet