Insuring the future of mobility

The insurance industry’s role in the evolving transportation ecosystem

Since the first personal auto insurance policy was written over a century ago, the basic insurance model hasn’t changed much:

Policies are typically written on a vehicle-by- vehicle basis, protecting the owner and driver if the vehicle is involved in a collision, stolen, or otherwise damaged. It’s clear, straight- forward, and as established as almost any business practice.

Now, the future of mobility looks poised to upend that model and change nearly every- thing about auto insurance: who the custom- ers are, what products they demand, and how to market to them. Indeed, as ridesharing, carsharing, and autonomous vehicles increas- ingly replace traditional models of automotive transportation, insurers may have to rethink their role in the mobility ecosystem and their relationship to drivers, owners, and vehicles. For future underwriting models, insurers will likely need to consider the advent of safer vehicles, new vehicle designs, and new sources of risk and liability. This likely means:

  • A decrease in the frequency and, over time, the severity of loss events
  • Changes to vehicle repair and replacement costs
  • New customer categories and the creation of new insurance products

While widespread availability and adop- tion of fully autonomous vehicles may be a few years away, carsharing and ridesharing are already gaining traction, particularly among the young or those living in higher-density urban environments. For insurers, shared mobility reduces the number of vehicles per capita, challenges vehicle-centric underwriting, and will likely give rise to large fleet operators, meaning:

  • A shift of the product and premium mix for passenger vehicles from individual buyers to commercial buyers
  • The expansion of driver-centric policies and introduction of per-use policies
  • An increase in the prevalence of self-insur- ance by larger fleet owners as an alternative to purchased coverage

While demographic shifts are gradual, technology is advancing and social attitudes are shifting at a fairly rapid rate. Ridesharing trips have nearly tripled in five years in the United States, and six states and Washington, DC, have already authorized the testing of fully autonomous vehicles. With the emergence of a fundamentally different future mobility ecosys- tem, insurers have an opportunity to shape the auto insurance markets of tomorrow.

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