Automakers are about to shake up the auto insurance industry
Brussels – 28th September 2021
Last week, Elon Musk announced Tesla’s intent to launch a UBI (Usage-Based Insurance) product in Texas starting in October. This came after GM’s and Ford’s recent launches of telematics insurance programmes. The long anticipated move towards embedded connectivity is now impacting insurance too.
In its latest research, PTOLEMUS Consulting Group has found that connected car insurance is increasingly replacing traditional car insurance, driven by the COVID pandemic but also OEMs’ own initiatives.
The Connected Auto Insurance Global Study reveals that many insurers now write over 50% of new business to connected auto insurance. Furthermore, at least 13 OEMs have launched insurance telematics products in the last two years, all of which utilise built-in connectivity.
Dr Andrew Jackson, Research Director, said: “When car usage collapsed during the COVID-19 lockdowns, policyholders demanded prices based on actual mileage. OEMs have been stepping in to the gap, and in a clear statement of intent, half of all OEM in-house UBI programmes use connected car data only, removing insurers and Telematics Service Providers (TSPs) from the equation.”
At least 17 OEMs are selling connected car services with dynamically-priced insurance already available from Ford, GM, Kia, Hyundai, Mercedes-Benz, Stellantis, Tesla, Toyota and Volkswagen. Many car manufacturers have also forged insurance partnerships (i.e. Ford with Arity, GM with American Family, Ford with Octo Telematics, PSA with AXA, Daimler with SwissRE).
Dr Jackson concluded: “It should be remembered that insurance represents typically 10-15% of a vehicle’s TCO (total cost of ownership). So the ability to reduce this would have a major positive impact on OEM’s sales, especially to fleets.”
PTOLEMUS’ landmark report analyses OEMs strategies and the challenges for insurance companies. It analyses 15 key countries and regions, across 5 continents, includes forecasts to 2030 and profiles 26 top insurers and TSPs.
A free abstract of the study can be downloaded here.