Automotive Insurance: What is Shaping the Future of the Industry?
Auto insurance is necessary because it provides financial protection to the users if they are involved in an automobile accident. Moreover, it also helps the drivers if they accidentally cause damage to or injury to another person’s vehicle. Insurance policies also cover damage caused by an accident and other risks associated with falling objects, fire, or theft. Some countries have mandated auto insurance. Moreover, the demand and awareness regarding automotive insurance are increasing continuously. People around the globe are adopting insurance policies in order to save their future. In addition, prominent players, such as Chubb Group, AVIVA Ltd., are offering favorable policies to help the consumers. Automotive companies are also introducing beneficial offers that help the consumers and benefit the market players.
Toyota Insurance Management Solutions recently unveiled its first branded product, Toyota Auto Insurance, which intends to offer quality, customizable coverage at affordable rates in 2021. The car manufacturer introduced Toyota Insurance Management Solutions, a joint venture between Aioi Nissay Dowa Insurance Services, Toyota Financial Services International Corp., and Toyota Connected to offer car insurance online.
Disposable income
The growing disposable income and increasing working population are considerable benefits for automotive insurance providers. Due to rising disposable income, the demand for automobiles is increasing, which is ultimately fueling the adoption of automotive insurance.
Rising number of accidents
The growing number of accidents is another key factor boosting the demand for automotive insurances. Budget Direct Insurance estimates that there were around 7,690 road accidents in Singapore in 2018. Moreover, Statista estimates that in 2019, there were approx 150 thousand casualties and injuries reported in Indonesia due to traffic accidents. In addition, Laos recorded 1.52 thousand traffic accident casualties in the year 2019.
Increasing initiatives from companies
Companies are continuously entering into partnerships and launching favorable schemes to help the consumers. For Instance, AVIVA, a leading life insurance company, recently made headlines as the company chose Zenith to present an electric vehicle salary sacrifice program to its workers. The salary sacrifice program intends to assist the insurer to acquire net-zero carbon emissions by 2040. The ASEAN automotive insurance industry is growing rapidly due to such initiatives. The industry segments focus on policy terms, risk cover, vehicle application, vehicle ownership, end-user, vehicle type, and distribution channel. Astute Analytica estimates that the ASEAN automotive insurance market will grow at a compound annual growth rate (CAGR) of 44% during the forecast period from 2021 to 2027.
The growing awareness for automotive insurance
The outlook of the automotive insurance industry is changing rapidly. Governments of various countries are introducing favorable regulations to boost the safety of the users. In India, the parliament introduced various amendments to the Motor Vehicle Act in 2019. It revised penalties against violation of possession of a basic TPL policy, which is forecast to boost the sale of motor insurance policies in India.
The Insurance Regulatory and Development Authority of India (IRDAI) has mandated a three-year insurance policy for vehicles and a five-year policy for motorcycles. In addition, the Motor Vehicle Act requires consumers to have mandatory third-party liability coverage. It aims to protect both insured and uninsured people from accidents.
Digital Transformation
The digital transformation has brought up innumerable opportunities for market growth. To improve the productivity of car insurance distribution platforms, market players are progressively employing new technologies. These technologies include GPS, telematics, blockchain, artificial intelligence (AI), data analytics, and big data. Furthermore, digital transformation has helped service providers to offer highly customized customer experiences. It also helps businesses to expand their offerings in the coming years.
The rising need for insurance automation to offer consumer products and supply real-time data will fuel the industry’s growth. In addition, the growing deployment of new technologies such as artificial intelligence (AI) and machine learning will accelerate the industry’s growth. new technologies are deployed in order to amplify the process and help employees with quick claiming procedures, which will benefit the industry in the coming years.
Recognizing the scope of the digital transformation, market players are also entering into partnerships and launching advanced products and features in order to cater to the growing demands. For Instance, ICICI Lombard inked a partnership with Microsoft Corporation with the aim to add an AI-enabled car inspection feature in its mobile app, named Insure.
Liberty Mutual also made headlines in the past as the company announced its strategic relationship with Groundspeed Analytics, Inc., a leading data science company. This agreement intends to convert unstructured documents into structured, enriched, and clean information.
In addition, companies are adopting smart photo analysis systems to comprehend car damage through crash detection, assessment, and insurance claim initiation. Industry expansion is significantly associated with the growing shift toward consumers towards new technology. Digitalization is getting a lot of traction in many parts of the world. Digital technology, as well as automobile telematics, are transforming the automotive insurance sector today. The market is growing due to the introduction of new technology and increased awareness of the benefits of artificial intelligence.
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