In December, Mercedes became the first automaker to win approval to deploy a hands-free driving system in Germany, pulling ahead in the race to offer higher levels of automation in one of the world’s most competitive car markets.

It might only be on cetain stretches of German autobhans and no faster than 60km/hour (37m/hour) but is a fisrt small step.Mercedes seeking regulatory approval in other countries to higher speeds and this is an evolutionery step to autonomous vehicles. 

This evolution is paralleled by the trend to embedded insurance and subscription services where consumers can subscribe to mobility. There is much discussion today as to whether or not auto (or truck) OEMs will be in a better position to monetise data from the vehicle technology stacks to offer insurance or whether carriers will be able to. The most quoted example being Tesla which is offering insurance in certain US states and can be expected to expand this across the US and into Europe.

On the one hand this is presented as a disruptive threat to incumbent carriers which do not have the real-time nor volume/depth of data that Tesla has and hence Tesla can underwrite business more effectively and offer cheaper insurance to Tesla drivers. 

On the other hand critics say that Tesla is forced into this as insurance costs are so high it deters buyers of its vehicles. 

Tesla is paying attention to the whole cost of ownership/subscription of its vehocles with the long-term eye on fleets of robotaxis where usage inludes completely embedded insurance. 

Carriers can also partner with OEMs to embed insurance and they can offer all he vehicles in a houseold and not just Tesla or Mercedes vehicles. And bundle with home, travel and pet for the totally connected and insured ecosystem.

In "The Future of Auto Insurance- Connected: Embedded: Subscribed" it is argued that will lead to a great consolidation of motor insurance carriers as OEMS will not want to deal with more than 4-6 carreirs globally. Add to that the fact that around half od carriers do not even make an economic return on capital it does suggest a big shake up over this decade into a top quartile of profitable carriers.

Some carriers are both profitable and heavility engagd in embedded insurance and mobility services. Thisnweek in London KBW hosted tyhe May "Innovation in Finance" 2 day event with the first day focussed on insurtech.

Patrick Wirth VP Ecosystem Mobility at Baloise Group descibed the strategic investment in mobility companies offering a wide range of mobility services to customers in Europe in which insurance (from Baloise) is embedded. So growing a profitable mobility ecosystem of companies incorporating embedded and profitable insurance.And the services behind that insurance like claims for example.

Carreres have the resouces and capabilities to halp prevent and mitigate risk and manage the wide range of claims from simple body oanel damage to drivable vehicles to complex situations involving third parties, prsonal injury, property damage and long tails.

OEMs are not resourced and probably not motivated to deal with this complexity and rely on partnering with carriers. 

Meanwhile Baloise Group is paving the way with its innovative strategy and it will be intersting to see other carriers delivering a similar business model. 

Telematic, IoT, the connected vehicle and the very best products for consumers and business whose needs are changing and will, do even more as driving behaviours change and AVs develop.

Carriers will need the core systems of record and claimd management platforms to be able to support this innovation strategy. For more on that see "Creating value, finding focus and choosing the right technology partners".

Innovation is happening and this is the time to be experimenting, findng out what works well and what does not. Otherwise there is the real danger of being too late and missing out on being in that top quartile of carriers over this decade.

Further Reading

Everyone wants to be a beautiful butterfly

A Perfect Storm is Brewing in the Auto Insurance Industry