The Road Ahead: 4 trends revolutionising motor insurance you can’t ignore

The motor insurance industry is undergoing a transformation driven by rapid technological advancements, evolving consumer expectations, and the global shift toward sustainability. With the rise of electric vehicles, AI-powered claims processing and shared mobility, these emerging trends are reshaping the landscape of motor insurance.

As the industry adapts to these changes, insurers have a unique opportunity to innovate, offering more personalised, efficient, and eco-friendly solutions that meet the demands of modern drivers. The future of motor insurance will be defined by those who can join the following trends and drive the next wave of industry evolution.

Connected vehicles and IoT

Connected vehicles with Internet of Things (IoT) sensors are changing how insurers assess risk and manage claims. These sensors provide real-time data on the health of the vehicle, driving behaviour, accident patterns, and more. This empowers insurers to make data-driven decisions and provide more personalised policies for individuals and businesses alike. For example, drivers with a safer pattern can be offered lower premiums, while those at higher risk may be sent proactive alerts to adjust their behaviour, reducing the likelihood of accidents.

IoT-enabled real-time monitoring also contributes to predictive maintenance and enhances vehicle safety by identifying mechanical issues before they lead to failures or accidents. When put together, this can reduce claim frequency and ultimately lower insurance costs.

AI-driven claims processing

Artificial intelligence (AI) is transforming the claims process, making it faster, more efficient, and less error-prone. Traditionally, claim settlements involved substantial paperwork and long processing times that led to frustration for customers and increased operational costs for insurers.

AI-driven automation in claims processing results in quicker claim settlements. Insurers can assess damage using AI-powered image recognition tools and provide real-time assessments of repair costs. Moreover, AI algorithms can identify patterns in claims data to detect potential fraud. This leads to more accurate settlements and minimises the risk of inflated or fraudulent claims, benefiting both customers and insurers, and strengthening their relationship by delivering efficiency and trust.

Electric vehicles and sustainability

As EVs gain popularity, the motor insurance industry must adapt to new risks and opportunities. EVs come with unique considerations, such as battery-related risks, specialised repair needs, and the availability of charging infrastructure.

For instance, EV insurance can come with incentives, such as reduced premiums for eco-conscious driving or using renewable energy sources for charging. Green insurance products promoting sustainable practices will become more common, offering discounts to those who choose hybrid or EVs over traditional petrol or diesel models. This focus on sustainability aligns with the growing demand for environmentally responsible choices in India and beyond. As the world moves towards greener transportation solutions, insurers offering comprehensive coverage for EVs will likely have a competitive advantage.

Shared mobility and microinsurance

The concept of vehicle ownership has been shifting, with more people favouring ride-sharing, car rentals, and other shared mobility options. This trend presents a new challenge and an opportunity for traditional motor insurance products. Typically, motor insurance is designed for long-term, single-owner vehicles. But now, insurers must adapt to the growing demand for flexible, short-term policies that cater to multiple users of a single vehicle.

Here, microinsurance provides an appealing solution that covers customers for short periods. Microinsurance policies, which offer coverage for temporary use, are already gaining traction in the market as these policies provide flexibility and affordability, allowing users to pay only for the coverage they need. Insurers who can create flexible, usage-based policies will be well-positioned to capitalise on this trend, catering to the needs of individuals, ride-sharing companies, rental agencies, and fleet operators.

In conclusion, these trends present opportunities to reimagine traditional insurance models and embrace new approaches that offer flexibility, efficiency, and sustainability for both B2B and B2C clientele in the motor insurance industry. Insurers must stay ahead of these trends to remain competitive in a rapidly evolving market. Those who adapt quickly will not only meet the demands of today’s consumers and businesses but also pave the way for a more dynamic and responsive insurance industry in the years to come.

Rakesh Kaul, Chief Business Officer, SBI General Insurance