How technology will redefine the car insurance business model

Like most industries, technology is dramatically impacting car insurance - with those impacts being felt across the entire value chain. Good article by McKinsey & Company looking at some of the disruptive pressure points.

Three technologies that are likely to shape future mobility solutions - autonomous driving, connectivity and embedded telematics, and vehicle electrification. McKinsey also explores three possible scenarios for insurance:

> OEMs enter the market with in-house offerings
> OEMs and insurance carriers develop partnerships
> OEMs become tech-enabled distribution aggregators and data providers

We are already seeing these types of offerings being explored by the likes of Tesla, to Ford and Honda.

Very challenging times ahead for traditional insurers, as manufacturers are arguably in the box seat - they have access to the powerful connected car data, the opportunity to engage the customer. Whether and how they exploit this position remains to be seen. Nonetheless, I suspect we are seeing the emergence of a new business model that will challenge insurance incumbents!

Source: McKinsey