Motor Insurance in the future and autonomous vehicles
Transcript of Motor Insurance in the future and autonomous vehicles
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MOTOR INSURANCE IN THE FUTURE
AND
IMPACT OF AUTONOMOUS VEHICLES
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LIMA Programme
2020
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“One of the most visible impacts of
COVID-19 is empty roads. Many of us
have embraced the technology movement
and have gone online. The question
remains whether this is a once-off shock or will this trend partly exist in the future?
Furthermore, how will COVID-19 impact
Motor Insurance and, looking to the future
of Autonomous Vehicles?”
Tashia Bhogal
Senior Casualty Treaty Underwriter
Munich Reinsurance Company of Africa Ltd.
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24 August 2020
Tashia Bhogal
Motor Insurance in the future and
Autonomous vehicles
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524 August 2020Motor Insurance in the future and Autonomous vehicles
Discussion points
• Covid 19 Motor Observations
• Claims Frequency and Claims Severity
• Usage-Based insurance and Behavioural Modelling
• Autonomous vehicles
Picture: Getty Images
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624 August 2020Motor Insurance in the future and Autonomous vehicles
Kick-off
Compared with pre-corona times, what percentage do you currently utilize your car?
Chat function
• 0%-30%1
• 31%-60%2
• 61%-90%3
• 91%-120%4
• 121% or more5
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Covid 19 Motor Observations 1
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24 August 2020 8Motor Insurance in the future and Autonomous vehicles
Covid 19 Motor Observations
Source: The Floow
Daily distance driven
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24 August 2020 9Motor Insurance in the future and Autonomous vehicles
Covid 19 Motor Observations Composition
Does less mileage mean proportionately lower risk/ and therefore lower premiums?
Getty Images
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1024 August 2020Motor Insurance in the future and Autonomous vehicles
Covid 19 Motor Observations
▪ Reduced KM per trip ▪ Reduced number of trips per
user
▪ Reduced number of users
driving
Getty ImagesGetty Images
Getty Images
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Claims Frequency and Claims Severity 2
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Image: monsitji / Getty Images
Claims Frequency
↓ Less vehicles on road during strict lockdowns (more people WFH).
↓ Ban on alcohol.
↓ Less theft of vehicles (most people home with cars parked there and increases in traffic control/road blocks).
− Increased reporting lag.
− Reduced claims handling workforce.
↑ Tendency toward driving vs. flying for local holidays (thereto, more local vs. international holidays).
↑ Less experienced drivers on the road
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↑ Increased high speed claims.
↑ Supply chain disruption and supply-shortage inflation ⇢more work for reduced staffed panel beaters ⇒ increased prices.
↑ Increased moral hazard following difficult economic situation/economic distress (claiming for unjustified/faked losses on MOD) ⇒ similarly, increased fraud.
↑ Inflation on cost of parts due to depreciating ZAR.
↑ Aging vehicle population
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Claims Severity
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Other
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➢ Increased lapses/Higher Churn
➢ Shorter retention period
➢ Reduced new car sales
➢ Change in sales and distribution channels => Shift to online
➢ Increased use of AI image sensory loss assesment
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24 August 2020 15Motor Insurance in the future and Autonomous vehicles
Market Reactions
Is this a once–off event or a transformation?
What will remain with us, long term?
We need to react better to our customer everchanging needs.
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Usage-Based Insurance and Behavioural
Modelling 3
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Usage-Based Insurance
USAGE-BASED
MODELS
“Pay As You Drive”:
• One major factor: e.g.: km driven• Price varies with usage (e.g.: number of km driven)
“Pay How You Drive”:
• Driving score based on a number of behavioral factors: e.g.: braking, acceleration, cornering etc.
• Price discounts based on score• Other rewards/services (gamification)
• Powered by telematics technology
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We offer a free trial of our smartphone-as-a-sensor
solution “RE_drive”
We have the right technology
Publicly available on the App Store (iOS) and Google Play Store (Android)
Usage-Based InsuranceRE-Drive_Munich Re app
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24 August 2020 19Motor Insurance in the future and Autonomous vehicles
Behavioral Modelling
▪ Our traditional risk models need to be merged with demand model.
▪ Price optimization at a single customer level
▪ Advanced renewal considerations
Journey towards technical excellence
▪ Afford more flexibility
▪ React to changing circumstances movement to higher/lower LSMs, credit scoring
▪ Signal vs. noise
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24 August 2020 20Motor Insurance in the future and Autonomous vehicles
Summary
Getty Images
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24 August 2020 21Motor Insurance in the future and Autonomous vehicles
Our future - Looking through the binoculars
Getty Images
Thriving for digital transformation
What does our world post
Covid look like?
Is traditional motor
coverage still relevant?
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Autonomous Vehicles 4
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24 August 2020 23Motor Insurance in the future and Autonomous vehicles
Autonomous vehicles-technology
Source: Munich Reinsurance America, Inc., 2016,;The Drive, Here’s How the Sensors in Autonomous Cars Work, 03/27/17
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24 August 2020 24Motor Insurance in the future and Autonomous vehicles
Autonomous vehicles-SAE/NHTSA Levels of Automation
Source: NHTSA, “Automated Vehicles for Safety,” accessed 10/19/18
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Autonomous Vehicles- 2015–2022 estimated timeline
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Source: Favaro FM, Nader N, Eurich SO, Tripp M, Varadaraju N (2017) Examining accident reports involving autonomous vehicles in California. PLoS ONE 12(9): e0184952. https:/ / doi.org/ 10.1371/ journal.pone.0184952
Motor Insurance in the future and Autonomous vehicles
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2624 August 2020Motor Insurance in the future and Autonomous vehicles
Impacts to society, accelerating mobility ecosystem and
impacts on insurance
Impacts to society
▪ Safety
▪ Mobility
▪ Environment
▪ Ownership → MaaS
▪ Employment
Accelerating Mobility Ecosystem
▪ Regulation and Government
▪ Public Attitude
▪ Technology advancement
▪ Cyber Security
▪ Valuation and Employment
Impacts on insurance
▪ Regulation and
Government
▪ Public Attitude
▪ Technology advancement
▪ Cyber Security
Getty Images
Source: Deloitte, “The Future of Mobility,” 5-14-19Pictures: Getty Images
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24 August 2020 27Motor Insurance in the future and Autonomous vehicles
Our exciting future
Changin
g I
ndustr
ies
Hotels
AVs could reduce
single-night stays
Parking Garages & Lots
Demand for long-term
parking might decrease
as AVs move
continuously between
various places
Car Dealers
Consumers may be
seeking on-demand
usage or a subscription
model instead of buying a
car
Healthcare
AVs could function as a
diagnostic checkup site
for passengers to receive
simple healthcare
Interior
design/manufacturing
Companies will specialize
in vehicle-interior design –
work mode, lounge mode
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24 August 2020
Tashia Bhogal
Q&A
Thank you
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