The changing face of motor insurance in India
When Uber tested driverless cars in Pittsburgh in August 2016, it was a technological marvel that both enthralled people and caused concern at the same time. Insurers are already planning ahead for the implications of this development on the insurance business. In addition, the impact of anti-collision technology powered by the Internet of things (IoT) has got insurers concerned. The core of the motor insurance business, which is accident risk, is clearly at risk. Motor Insurance 2.0, a joint report by The Boston Consulting Group and Morgan Stanley, written in 2016, predicts that by 2040, motor insurance could decline by as much as 80% in mature markets.
Luckily for Indian motor insurers, the prospect of driverless cars is some time away and market growth is also not a concern. Yet, technology advancements, the increasingly connected world and the ability to collect and process data is transforming the Indian motor insurance industry. Customer experience is about to improve drastically across sales, service, renewals and claims along with increased breadth of products.
Insurers will target customers like you, the car owner, right at the beginning of your car purchase journey. New car insurance is already integrated with a new car purchase and is included in the “on road” price.
You notice the premium but hardly pay attention to the insurer or the product features. In the future, however, motor insurance will be a key talking point when the car salesperson is making her pitch. She will explain how the insurance price is optimized based on the safety features on board the car and how the car electronics interface with the automatic claim notification process in case of an accident.
She will also demonstrate how the insurance app can be conveniently accessed through the car’s infotainment system. The insurance app will be activated along with the vehicle delivery. How’s that for a simple and convenient onboarding journey?
Once onboarded, insurers will closely engage with customers to ensure safe driving and to prevent future accidents. Fewer accidents mean a win-win for you, the car owner, as well as the insurers, who look to achieve lower claims, which account for 70-80% of the premium. The insurance app powered by telematics sensors and GPS tracking will give you tips on safe driving based on your driving patterns. You will indeed pay more if you drive rashly. Such technological sophistication will also allow insurers to offer bite-sized “pay-as-you-drive”(PAYD) products or products that cover only specific geographies/drivers/timings with an attractive price.
Innovation will also make renewals more convenient. As the renewal date nears, your digital personal assistant will prompt you and offer you help in narrowing down the options on the basis of your profile. Instead of answering untimely calls from call centres or dealers, you will be able to enter into chat sessions with chatbots of insurers or web aggregators at your convenience. You will be able to get quotes on the basis of a picture of the number plate or registration card that you will send during the chat. Digital lockers will save you the hassle of finding the old policy and other details such as car engine number, making the renewal process seamless. Much like how the process of registration for marathons has evolved. I am sure the active runners among you remember the days one had to find a picture, an identity proof and a previous timing certificate, all within a certain size. Now you just register once and all the information is on the cloud (equivalent of digital lockers).
God forbid, if you meet with an accident or a breakdown, your insurer will be your friend/partner in need. The electronics in your car will communicate directly with your insurer, remote monitoring will inform the insurer about the extent of damage, and whether the car is drivable or not. Drones will be on site within minutes to capture digital evidence of the accident and estimate the damage. Without you having to ask for it, the tow truck and replacement car will be sent proactively. You will not need to wait for the surveyor as your claims will be authorized based on the uploaded pictures of the damages. All this will happen within minutes, and not weeks or even days. Sounds like science fiction, right? But this will be a reality in the near future.
The confluence of technology advancements, big data and IoT is set to transform motor insurance for customers as well as for insurers. The customer experience of tomorrow will entail personalized offers, instantaneous paperless transactions, an intuitive digital experience, natural language interaction, and above all, peace of mind.
In summary, customers can expect faster, better, cheaper (for better risk) and more convenient motor insurance. Yet, none of this should concern you if you are intending to give up car ownership and lead an Uber/Ola life. What is your thinking on this dilemma?
Alpesh Shah is a senior partner and director and leads the Asia Pacific insurance practice for The Boston Consulting Group. Aniruddha Marathe is a principal at The Boston Consulting Group. This is the second part of a three-part series focused on the changing face of the Indian insurance sector. All views are personal.