The Future of Auto Insurance
The future of auto insurance is very unknown. The industry in general has seen more changes in the past 5-10 years than it has in a very long time. With Insuretech companies coming to the market and many of them using telematics in their rating system it is transforming how auto insurance is sold. Telematics is where an auto insurance companies gives the customer a device or has them download an APP to track their driving habits and give them at monthly rate based on those driving habits. Here are a few auto insurance companies that we found that are starting to use telematics:
- Root
- Progressive
- Metro Mile
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All about new car insurance
Some people love this way of rating for auto insurance but others don’t. And there are others who wonder what else the auto insurance carriers are doing with their data. Sometimes your monthly rates can fluctuate because you sign up based on good driving habits but once you get the device in your car and the auto insurance company sees how often you drive over the speed limit or how sharp you turn your car. Customers do not like when an auto insurance quote is given and then they get their first bill its double what they were quoted.
Metro Mile is an interesting player though because they charge per mile and not a set monthly amount which is very different for the auto insurance industry. This can be a good option for people who work remotely and do not drive their car very often. This is a newer company and they are not in every state yet.
Online car insurance comparison sites
This is a segment in the market that has exploded over the past few years. An online auto insurance comparison site allows consumers to go to one site and get quotes through numerous different companies at once. This can save the consumer tons of time and can save them money also. This goes against the grain of using a local independent agent like many have done for years. Consumers like this though because you can shop so many companies at one time. We know how much we all hate taking hours out of our day to shop for car insurance and these sites can help that. Here are a few auto insurance quote comparison sites we have found:
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It is important to recognize an online auto insurance quote comparison site vs a Lead Generation site. There is a difference, the main one being that you could receive lots of unwanted calls if you land on a Lead Generation site. These companies take your info and sell it to insurance companies and agencies for them to reach out to you and try to give you a quote. No doubt you can sometimes find a cheap auto insurance quote through one of these Lead Generation companies due to the sheer mass number of quotes you will receive. It's proven the more quotes you get the higher your chances of saving money are going to be.
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How will autonomous vehicles affect car insurance?
The self-driving vehicle craze has been increasing year after year. With companies like Tesla, Apple, and Google jumping in along with the auto maker stalwarts GM and Ford jumping in also is making this a very interesting situation. Self-driving cars have the potential to disrupt the car insurance industry more than anything else has in a long time.
But these tech companies are finding out that executing this plan of autonomous vehicles is very challenging. With some of the recent car accidents and even deaths possibly related to autonomous driving, has really brought great concern from the public on can they trust these vehicles. On paper it looks great because autonomous and the potential ride sharing programs that can come of this would cut the cost of vehicle ownership and maintenance dramatically.
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Another question people have about these vehicles is the price. How much are these vehicles going to cost to purchase? Also, how much are they going to cost to maintain? We do know they will be electric but will the cost be higher to repair than normal cars that take gasoline. As you can see there are many questions overhanging this issue.
But if this plan can be executed by the Tech world there is no doubt it could be a big saver for people who would not own a car and choose to do ride sharing with autonomous vehicles. They would save on gas, insurance, and car maintenance which can really add up. We see this being a major disrupter in the large metro area where heavy traffic is an issue and ride sharing is more popular. We feel people who live in more rural areas are going to still want to own their gasoline fueled cars like they have for many years.
How electric vehicles can affect auto insurance
Electric vehicles are on fire right now! There are so many auto makers that are now trying to get into this space after seeing how successful Tesla has been in this market. But repairing electric vehicles are very tricky for auto insurance carriers. Electric vehicles cost insurance companies much more to repair than normal vehicles. In fact, many auto insurance companies will not even offer coverage for a Tesla. Which is probably why Tesla has started their own auto insurance program. This is very interesting that Tesla has decided to enter the insurance market. Will this be a new trend of auto insurance makers insuring the cars they sell to the consumer? Its very possible, I think they see an opportunity here. GMAC tried it in the past and then shut it down pretty quick after. They found that the sales part is easy but the service and claims part can be difficult. But GM did announce recently that they are going to give auto insurance another try. So, it's very possible if these two companies are successful selling auto insurance to their customers that many others will follow suit.
If this does happen it will take a large market share from traditional insurers. With all the new InsureTech companies already disrupting the auto insurance market this will be even bigger of a gut punch to the industry.
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How InsureTech is changing how auto insurance claims are handled
One of the benefits Insuretech has brought to the market is the efficiency of how claims are handled. Many auto insurance companies can handle claims digitally without having to see the damage on your car in person. Many companies will even allow you to turn in and complete the claims process all through their APP. Notoriously, turning in an auto insurance claim has been a nightmare and takes forever and with some carriers it still does. But with the auto insurance companies starting to do appraisals online versus having to track you down and appraise the car in person has really made the claims process much easier for the consumer and the company. We expect for auto insurance companies to continue to innovate over the coming years to improve the claims handling process. This will benefit the consumer and help keep claims costs down for the auto insurance carrier and hopefully they can pass that savings on to the consumer.
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The future of auto insurance premiums
If autonomous vehicles and remote work continue to increase over the coming years, we could see a dramatic drop in auto insurance premiums.
Autonomous vehicle impact- Autonomous vehicle impact would be huge on auto insurance premiums. These vehicles if executed property will lower the number of accidents on the road and in turn will mean less claims to pay for auto insurance companies. This will force insurance carriers to lower their premiums and will no doubt bring in an influx of competition.
This will also bring the demand for ride sharing services that could push people to not own a car anymore and just use autonomous taxi services (Like Apple has discussed). This would eliminate the auto insurance premium altogether hence owning a car would not be necessary if you can grab a ride from an APP on your phone. We expect autonomous vehicles to hit the commercial world first before it does for personal use. Fleets of taxi services will more than likely be the first to implement autonomous vehicles. This could however be a benefit for commercial auto insurance because these Tech companies who have fleets of cars that are robo taxis will have to insure all these vehicles on the road.
Remote Work- Remote work is another thing that could impact auto insurance rates. If people work from home that means less time on the road, which means less likelihood of having an accident. The less claims auto insurance carriers have will mean the more they can pass that savings on to the consumer. This is why we mentioned Metro Mile above is because they are the only company, we are aware of that charge's insurance per mile vs a set monthly price. This is very different and will be interesting to see if they can collect enough premium to succeed.
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How auto insurance advertising is changing
Auto insurance advertising for years was based on your place in the phone book and word of mouth. Word of mouth is still important but it's done a little differently now and is more spread through social media. If you look through your social media feed you will probably be lit up with auto insurance advertisements. Facebook and Google ads have become the primary way of marketing in the auto insurance industry. Although some larger companies still invest a lot in TV ads that seems to be dying recently and more focused on Streaming service ads and YouTube ads. This form of advertising is much cheaper than traditional TV ads.
Concluding thoughts on the future of auto insurance
When autonomous vehicles will truly disrupt the auto insurance industry is very unknown at this point. Autonomous driving will not only affect auto insurance but also Car Dealerships, Oil and Gas Industry. Car Manufacturing, and a slew of other industries. This is definitely not an overnight change though it will be a long process before it can be executed. Many have predicted we won't see a major impact until 2040 at the earliest. So, this gives auto insurance companies plenty of time to prepare and adapt for the coming changes. But many ask, will the majority of society really trust a car to drive itself? No one really knows that answer for sure but we will probably find out in the near future.
updated: 8/18/2021