德勤-以技术为导向的数字转型重塑汽车保险战场（英文）-2018.4-15页

Driving to a New Growth: Tech-Led Digital Transformation in Auto Insurance

Core Content Overview

The auto insurance industry is undergoing significant transformation driven by technological advancements, ecosystem partnerships, and evolving consumer behavior. These changes are reshaping traditional models, introducing new business practices, and altering the market dynamics. The key forces at play include the commercial ownership of policies, shorter policy periods, unbundling of perils, commoditization of risk, unpooling of risk, and the separation of origination from underwriting. These trends are not only influencing how insurance is sold and priced but also who owns the insurance and how it is managed.

Main Trends and Key Insights

1. Commercial Ownership of Policies

• Description: As the sharing economy and self-driving cars grow, commercial entities may take on more responsibility for insuring personal assets.
• Examples:
  • Sharing economy platforms bundle individual insurance demands into per-usage fees.
  • Peer-to-peer insurers may partner with traditional insurers to cover different parts of the risk.
  • Auto manufacturers could assume liability for self-driving algorithms.
• Impact on Incumbents:
  • Shift from personal to commercial policies.
  • Erosion of the insurance industry as non-insurers develop risk-insurance capacity.
  • Expansion of reinsurers' role in underwriting for individuals.
• Necessary Conditions:
  • Widespread adoption of self-driving technologies.
  • Regulatory acceptance of non-asset owners owning policies.
  • Sufficient and fair coverage from commercial institutions.
  • Resolution of potential conflicts of interest.

2. Shorter Policy Periods

• Description: Consumers are moving towards on-demand, micro-coverage models that align with their actual usage.
• Examples:
  • Telematics and IoT sensors enable real-time monitoring of usage.
  • Mobile apps allow consumers to purchase insurance on-the-go.
• Impact on Incumbents:
  • Reduced ability to pool risks across customer lifecycles.
  • More unpredictable cash flows, requiring new risk capital models.
  • Rise of virtual insurance distribution.
• Necessary Conditions:
  • Insurer capabilities to monitor and understand asset usage.
  • Mobile, user-friendly channels for on-demand insurance.
  • Educated customers who know when and how much coverage to buy.

3. Unbundling of Perils

• Description: Auto insurance policies are likely to break down into single-peril coverages, reflecting more precise risk management.
• Examples:
  • Property liability may shift to users in a sharing economy model.
  • Theft and fire protection may remain with the asset owner.
  • Auto manufacturers may retain liability for self-driving systems.
• Impact on Incumbents:
  • Need for diversified distribution channels.
  • Greater connectivity and underwriting capabilities.
• Necessary Conditions:
  • Sufficient demand for specific peril coverages.
  • Regulations that support new property consumption models.

4. Commoditization of Risk

• Description: With the rise of IoT and AI, insurance products may become more standardized, reducing differentiation.
• Examples:
  • Preventative technologies like self-driving cars and ADAS reduce human error.
  • Risk profiles become more uniform, making pricing harder to differentiate.
• Impact on Incumbents:
  • Reduced ability to differentiate.
  • Margin pressure due to price-based competition.
  • Erosion of premiums as risk levels decline.
• Necessary Conditions:
  • Mass adoption of preventative technologies.
  • Limited ability of insurers to track individual risk profiles.
  • Universal data availability for accurate pricing.

5. Unpooling of Risk

• Description: Insurers are moving from pooled risk models to individualized risk assessments.
• Examples:
  • Digital distribution and connected devices provide better insight into individual risk.
  • Customers may self-insure using savings or lines of credit.
• Impact on Incumbents:
  • Erosion of traditional premium prediction models.
  • Increased importance of expense ratios.
  • Competitive shakeup due to new entrants and alternative capital.
• Necessary Conditions:
  • Regulatory acceptance of individual pricing based on behavior.
  • Market consensus on individual risk pricing.
  • Continued data availability for accurate underwriting.

6. Separation of Origination from Underwriting

• Description: The insurance value chain is becoming more fragmented, with new players taking on underwriting roles.
• Examples:
  • Digital intermediaries offer risk analysis and product packaging.
  • Alternative capital sources (e.g., hedge funds) securitize insurance risks.
  • InsurTech startups may operate as carriers, not brokers.
• Impact on Incumbents:
  • New value propositions from intermediaries and underwriters.
  • Increased competition and innovation.
  • More commercial insurers and reinsurers entering the personal insurance market.
• Necessary Conditions:
  • Trust and transparency between underwriting and originating parties.
  • Regulatory acceptance of a more complex industry structure.
  • Continued appetite for alternative capital investment.

Future Scenarios

The convergence of these six forces is expected to lead to four key future scenarios in auto insurance:

1. Individualization of Insurance: Tailored products based on personal behavior and risk.
2. Insurance as Portfolio: Consumers may purchase a range of coverage options for different risks.
3. Off-the-Shelf Insurance: Standardized, easily accessible insurance products.
4. Insurance as Utilities: Insurance becomes a service that is consumed as needed, like utilities.

Asian Trends

• China:
  • Auto insurance startups are using big data and IoT to offer innovative products.
  • Examples: "Car wash subsidy" and "traffic jam subsidy" via telematics.
  • InsurTech is expected to grow rapidly, with a projected market size of CNY 1.1 trillion by 2020.
• India:
  • Integration of auto insurance with car purchases and "on road" pricing.
  • Telematics and GPS tracking are used to promote safe driving and "pay-as-you-drive" models.
  • Improved customer experience and convenience in renewals.
• Singapore:
  • Insurers are partnering with telematics companies to offer usage-based insurance.
  • Demonstrated benefits include reduced claim frequency and margin growth.
  • Examples: 37% decrease in claims and 50% premium savings via telematics.

Regulatory Support

• Hong Kong:
  • The Insurance Authority (IA) has introduced InsurTech Sandbox and Fast Track to support innovation.
  • These initiatives allow for controlled experimentation and faster market entry.
  • IA is also collaborating with the UK FCA to promote global FinTech innovation.
• China:
  • The China Insurance Regulatory Commission supports InsurTech with a favorable regulatory environment.
  • Three main segments: online distribution, product upgrades, and ecosystem innovation.
• Global Context:
  • Regulators are working to create a favorable environment for InsurTech and digital transformation.
  • The goal is to support new opportunities and enhance consumer benefits.

Conclusion

The auto insurance industry is at a pivotal moment, with digital transformation driving significant changes in ownership, pricing, product structure, and risk management. Insurers must adapt quickly to these trends, leveraging technology and forming strategic partnerships to remain competitive. In Asia, countries like China, India, and Singapore are already witnessing the early stages of this transformation, supported by proactive regulatory frameworks. The future of auto insurance will be defined by individualization, modularity, and the integration of new technologies into every stage of the value chain.