Mobility insurance market set to double at $1.38 trillion by 2030: Capgemini
3 min read 18 Apr 2023, 09:20 PM ISTAccording to Capgemini, the world's automotive industry is on the cusp of a ‘profound change’
PremiumMUMBAI : The mobility insurance market may double by 2030, driven by autonomous, connected, electric, and shared (ACES) mobility, according to the World Property Casualty Insurance report, 2023 released on Tuesday by global research firm Capgemini.
"....the mobility insurance market is expected to surge from its current $0.65 trillion to $1.38 trillion by 2030," said the report.
According to Capgemini, the world's automotive industry is on the cusp of a "profound change".
"Revenues (of the automotive industry) are on track to reach $3.8 trillion by 2030, up 35% from 2020. By the end of the same period, autonomous, connected, and electric vehicles (EVs) may comprise about 40% of the market, up from 10% in 2020," said the report.
However, behind the projected rapid growth lies a two-speed journey, according to Capgemini.
On one side, the traditional auto insurance market will continue to grow, adjusting pricing according to factors such as age, postal code, driving experience, and insurance history.
And on the other hand, autonomous, connected, electric, and shared (ACES) nominal premium is poised to see an eightfold increase, surpassing $0.5 trillion by 2030, according to the research report.
"Future-focused mobility solutions are disrupting traditional coverage as policyholders demand embedded protection for their journey," said Laurent Floquet, CEO, Mobility & Assistance, Member of the Board of Management, Allianz Partners.
As the mobility market evolves, carriers will shift from insuring assets to protecting mobility journeys by launching new business models focused on personalization, says the report
"In fact, 42% of policyholders want a single policy that covers them irrespective of their mode of transportation," said Capgemini.
According to the Capgemini Research Institute report, the global automotive industry is striving to achieve a triple-zero future, which entails zero congestion, zero emissions, and zero crashes.
"According to projections, autonomous, connected, and electric (ACE) vehicles will account for 40.1% of the auto market by 2030. This will result in the doubling of the mobility insurance market, with premium for ACEs expected to grow from $70 billion in 2021 to $570 billion by 2030. This growth is supported by the increasing adoption of innovative technologies such as 5G, AI, and telematics in the automotive sector, as well as declining EV battery prices and government incentives," said the report.
In 2020, according to the report, traditional vehicles dominated 90.1% of the auto market, while the remaining 9.9% was occupied by ACE vehicles.
However, this is set to change as India is showing a greater interest in adopting innovative mobility options as compared to its global peers, according to Capgemini.
"86% of Indian respondents expressed interest in connected and alternate energy vehicles, while 73% showed interest in autonomous vehicles. Globally, 66% of respondents expressed interest in connected and alternate energy vehicles, while 49% showed interest in autonomous vehicles," said the Capgemini report.
In India, insurers consider technology capabilities and competition as the key challenges in their journey towards the future of mobility, according to Capgemini.
Moreover, insurers will need to address customers' demands for innovative mobility coverage options, with 40% of Indian respondents expressing the desire for a singular coverage plan that would cover all risks related to mobility, according to the report.
"Talent and product development are key for insurers when evaluating their preparedness for the future of mobility, and Indian insurers appear to be more prepared than their global peers in these areas. However, embedded insurance models are becoming increasingly popular with the scale of ACEs mobility, raising concerns for insurers across the value chain. Indian insurers report better technology capabilities than their global peers to navigate the future of mobility, but they need to strengthen their delivery of value-added services to increase customer engagement," said Capgemini.
Indian customers, according to Capgemini, prioritize value-added services, enhanced claim processes, and digital distribution over personalized pricing, which is preferred by customers globally.
"Indian insurers have better underwriting capabilities than their global peers, with 47% of Indian respondents having advanced underwriting capabilities compared to 31% of their global peers. Nonetheless, the current preparedness of Indian insurers needs improvement to meet customer demands for personalized services. Overall, Indian insurers are marginally ahead in terms of value chain maturity but must continue to adapt to the evolving landscape of the future of mobility," added the report.
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