Auto insurance really hasn't changed much in decades. 

Most insureds still buy motor insurance annually through incumbent carriers and price comparison websites remain a major buying channel which is why most competition is on price. In  the UK legislation by the FCA bans insurers/brokers offering new customers better prices than existing ones. The FCA is also investigating broker practices so that they must prove the value-add they offer customers and justify their margins.

Meanwhile Covid lockdowns and reduced driving has encouraged more usage-based insurance (UBI). Auto manufacturers are increasingly offering embedded insurance at the point of sale, lease and short-term rental.  These are evolutionary rather than dramatic changes but in Australia Queensland-based underwriting agency Insuret has partnered with car subscription software provider Loopit to offer integrated car insurance and claims management for subscription fleet operators.

Insuret's CEO  Jason McDonnell says a barrier to industry transformation in Australia is legislation where laws prohibit much car innovation, and many insurers are resistant to developing technologies that will allow them to manage these alternative ownership models, given they are still emerging.

New mobility models are growing fast across the country though, and global trends indicate this will continue, with Volvo Cars’ subscription service making up almost 15% of new car retail business in its first year of business.

"Australian insurance retailers will soon have to adapt their services to cater for this increased demand,” Insuret says.

The Insuret subscription model for insurance caters to all newer forms of car usership, such as peer-to-peer fleets, rental car fleets, rideshare fleets and car subscription fleets. Just imagine future fleets of robotaxis as EVs, AVs and Tesla shake up the market. Insuret is challenging Australian carriers to face the challenge of new customer needs. 

"Australian insurance retailers will soon have to adapt their services to cater for this increased demand,” Insuret says.

New Loopit research shows almost a quarter of Australians now don’t own a car, and covid has accelerated the shift toward car sharing and subscriptions.

Car subscription differs from leasing, renting and car sharing and the owner of the asset is not the primary driver, requiring a new type of insurance based on the fact that there are multiple contacts which need to be considered to protect the asset owner.

Loopit and Insuret say most major insurers are not progressing their retail insurance models to appropriately manage a change to car subscription and other new forms of mobility.

The same may be said for carriers in North America, Europe and Asia still focussed on annual policies and fixed prices.

Insuret not only offers insurance but online claims services partnering with claims platform vendor 360Globalnet. Whilst "Quote and Buy"  has seen the most innovation by carriers and brokers why wouldn't claims be equally as important? That's when a customer really wants help and tests the capabilities of its insurer and broker. That is where customer loyalty, renewal and life-time value are really forged. 

It is interesting looking at short-term car insurance and new entrants to the market. In the UK a valuable service by Altus is the DigitalBar which rates insurers by digital maturity across the whole claims journey.

Quote and Buy gets all the innovation but Claims lags behind unlike the strategy at Insuret.

Take By Miles and Marmalade and look at the detail.

Good on letting customers buy insurance online but not good at letting them do the same when making a claim. This was in July 2021 so things may have changed and during 2022 Altus will update the rating.

Marmalade also has product innovation but lacks the same for digital claims.

Now incumbent carriers are not holding back on digital claims or Quote and Buy as you can see with top of the league AXA but still with lots of red spaces where digital innovation lags behind. 

So the 'digital maturity' top scoring carriers in the Altus surveys score well on applying digital technology across all aspects of insurance but are they developing the products that Generation X and Y customers really want? Insuret don't believe so.

There are opportunities here for both new entrant  full-stack insurers to develop the products and provide the combined digital and human engagement customers want. But carriers can stand up to the plate as well and are able to manage the complexities of insurance plus technology when they put heart and soul to the task.

Further Reading

How incumbent carriers survive, thrive or will be disrupted.

The best insurance claims process for the digital world

The (in)convenient truth about insurance claims  

For UK insurers trial the Altus DigitalBar free fr 7 days to test how you can use the data for strategy, planning, digital innovation planning and competitor analysis. Just email my at mike.daly@altus.co.uk