Insurance sector unprepared for emerging mobility risks

Insurers and risk managers have been told they need to prepare for a transformation in the world’s mobility systems with a move to electric and autonomous vehicles rapidly accelerating.

Capgemini has issued its World Property and Casualty Insurance Report, which revealed a future where insurers will need to evolve from traditional auto insurance offerings to ‘mobility protection’, as urban consumers adopt new mobility solutions that include Autonomous, Connected, Electric, and Shared (ACES) multi-modal options.

According to the report by the Capgemini Research Institute, consumers and regulators are placing heightened attention on sustainability, as policyholders worldwide indicate an interest in and support of connected and alternative energy vehicles (66%), and autonomous vehicles (49%). While consumers are not yet willing to replace their personal vehicles in the short-term, there is an increased desire towards adding new mobility options. The research shows adoption of micro-mobility shared vehicles, and multi-modal transportation solutions amongst urban customers will double from 29% today to 58% in 2025. The report also finds this changing customer behaviour is expected to drive premiums for ACES vehicles to grow eightfold from USD 0.07 trillion to USD 0.57 trillion by 2030.

In light of this mobility revolution, carriers face significant challenges to be able to cover these journeys: 63% of insurers are concerned about the adequacy of their technology capabilities and 45% about evolving customer expectations.

“The mobility industry is on the brink of a significant transformation. To successfully transition to this new era of mobility, insurers need to leverage their risk management expertise and partner with specialists like InsurTechs and BigTechs in the ecosystem for protection across a consumer’s entire travel journey. Organisations that test high-potential mobility value propositions, and scale mobility solutions through connected insurance platforms will position themselves for sustained relevance and growth,” said Kiran Boosam, global insurance industry leader, Capgemini.

“This new wave of mobility will require carriers to shift from insuring assets to protecting mobility journeys, which will demand new business models focused on personalisation,” the report added. “In fact, 42% of policyholders want a single policy that covers them irrespective of their mode of transportation, whether they are driving a car or using a ride-sharing service.”

However, Capgemini  added insurers today are not equipped to meet policyholder expectations. Less than a third of carriers (29%) reported they had the necessary product development capabilities, and even fewer (26%) said they had the right talent to offer customer-centric mobility solutions.

With ACES mobility gaining scale, embedded insurance models are becoming increasingly popular, raising disintermediation concerns for the carriers across the whole value chain, including distribution, underwriting, and claims management, cites the report. One way to navigate the ACES wave is to create a mobility ecosystem that offers modular subscription insurance to meet customers’ expectations for seamless coverage while delivering differentiated, value-added services. However, only 21% of insurers say they have advanced ecosystem partnerships to meet these consumer needs.

The report highlighted that for 67% of insurers, a well-defined mobility-minded technology roadmap is critical to success in the mobility future. However, only one-in-three (33%) say they have one. To meet these expectations, insurers should leverage their risk expertise and partner with mobility ecosystem specialists to successfully transition from selling products to providing customer-friendly mobility solutions.

However, Capgemini  added insurers today are not equipped to meet policyholder expectations. Less than a third of carriers (29%) reported they had the necessary product development capabilities, and even fewer (26%) said they had the right talent to offer customer-centric mobility solutions.

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