According to the NZ Herald Business section and Massey University Insurance lecturer Michael Naylor this morning, there will be no car insurance claims or insurance industry as we know it within 15 years. They say that once networked autonomous (self driving) cars are widely available, car crashes will be reduced by 80 to 90%. Here it is in full:
The car insurance industry will cease to exist by 2030 according to a new book written by a Massey University lecturer.
The prediction is just one of a number proposed by Michael Naylor, a senior lecturer in insurance at Massey’s business school, who has analysed how a range of technologies will change the insurance industry in the coming decades.
Naylor, who has taught financial and insurance advisers for 20 years, says a perfect storm is coming and the industry is in for a major shake-up.
“There is a perfect storm of technological advances which are about to combine, and disrupt both the insurance industry and the adviser/broker industry.
“The majority of current companies and advisers are technological laggards and will require immense transformation before they will be in a position to combat these threats.”
Naylor says the industry is wide open to disruptive new entrants and it will look very different in 20 years time to what it does today.
“The big transformation will probably come from the entry of tech-savvy external firms, which will do things completely differently – the ‘ubers’.
“The majority of existing firms will probably go bankrupt due to their inability to transform themselves into a client-centered model, while survivors will be so transformed that they may be unrecognisable.”
Naylor says insurers need to change their view of their business as a provider of insurance products to being a data company with real-time links to customers, specialising in personal services.
And that will also have a major impact on insurance consumers.
“In the future, all insured objects will give constant, real-time feedback to the insurer’s data centre – and that includes people. Wearable technology can provide minute-by-minute blood pressure readings and tell if your blood chemistry indicates an illness,” he says.
“Through the connection of objects to the internet it will be possible for insurers to know how healthy the food in your fridge is or how often you exercise. Imagine how accurately they can then predict your health risk for insurance purposes.”
Naylor says consumers will have to agree to share this kind of information but those who don’t face potentially higher premiums.
“…you’ll be classed as high-risk and your premiums will be very expensive.”
Naylor says the car insurance industry will probably be the first to sector to face major disruption.
“Once networked, autonomous cars are widely available, it’s been predicted that car crashes will reduce by 80 to 90 per cent.
“This development is not as far away as you might think – Volvo, for example has an aim of eliminating car crashes by 2020.”
Naylor believes car theft will largely become a thing of the past as voice and face recognition technology makes them nearly impossible to steal, leaving insurance only for damage caused by things bumping into the car or extreme weather events.
“The result is car insurance premiums will fall drastically, probably by as much as 90 per cent by 2030.”
While many might view the report as speculation Naylor says there already examples of innovative insurers using technology overseas.
British insurer Drive Like A Girl monitors the drivers it insures via a telemetric device that sends real-time reports, including alerts of any crashes.
He says the company is popular with young drivers who can prove they shouldn’t have to pay the high rates normally imposed on them.
Get those car insurance claims in now before it’s too late!
Bruce Barnham
No car insurance claims in 15 years? We all better hope not for a few thousands hard working panelbeaters will be out of business along with half the countries insurance claims handlers. Maybe not a bad thing after all! them I mean, NOT us!
Kerry
This is interesting for people that have self-driving cars, but they’ll still nee insurance companies for standard cars right? So car insurance claims will still happen and customers will still need Crash Management and panelbeaters, maybe just not as much if less car accidents happen due to the computer cars
JohnnyB
Your right about that. You can’t stop car insurance claims completely even with self driving cars, see the Tesla fatality last year. I don’t think good panelbeaters are going out of business any time soon, 2016 has been the busiest year for decades and with all the new immigrants on the roads now that won’t be stopping. High quality CRA panelshops are here to stay. Bring it on.
JJ Smith
They’ve been talking about the demise of car insurance claims crashes and driving for years. It’s never going to happen. A recent report from Massey University cays that new technologies will combine to reduce car insurance claims by 80% and see car insurance premiums drop to over 90% by 2030. Driverless cars are the usual suspect as the major disruptor in the car insurance market but the reality is it will take years even decades to replace the world’s vehicle fleet. In NZ the average car is 15 years old, trucks and buses are even older so even if all new vehicles sold in NZ were suddenly driverless from tomorrow, it would still take 20yrs to achieve close to full “driverlesssness”. New vehicle technologies, safety features and preventative initiatives like telematics have contributed to force down the car accident rate since the 80’s anyway but car crashes can’t be eliminated, there will always be a need for insurance companies and insurance brokers – and insurance claims. NZ has a big cost advantage that (for instance) the US does not – no personal injury claims, because ACC covers that, so one of the main the imperatives for driverless cars in the US does not apply in NZ so I wouldn’t be surprised in US insurers were funding some of the driverless vehicle R&D. Even black-boxes and the telematics that can detect erratic driver behaviour and/or film an accident while it happens (which is great evidence for not at fault drivers) is expensive so even large vehicle fleets in NZ don’t want to pay for it . Some insurance companies give minor premium discounts for the intel but I don’t think Kiwi drivers like being spied on, and probably don’t care that much about saving a few dollars because car insurance premiums in NZ are very cheap anyway compared to the US and UK – a few hundred dollars rather than a few THOUSAND which is common overseas.
Suze
Electric cars, driverless cars etc, it’s all over hyped. I work in the panelbeating industry every day and I don’t see car accident claims stopping any time soon. Driving skills are low here and I don’t see company cars getting fleet fit or crash free – ever! Fleet fit? – interesting term you use in lots of articles, not sure what that’s supposed to mean., something to do with health & safety driving maybe? Anyway these autonomus cars are all the news, maybe it could work on the autobans (maybe) but on crappy NZ roads – really??? I don’t think so. I reckon there’s a long way to go til computers and really do better than a human brain including factoring all the thousands of variables drivers have to make – in isolation or combined – way too complicated and takes years to master. And computers compute they do not THINK. Not going to happen people!
Terri
Interesting perspective. It goes against the grain of the current thinking that car accident claims should continue to fall over the pending decades but I note similar comments in Company Vehicle magazine this month. You might be right! It could just be wishful thinking from Google, Apple, Tesla and all the rest of the corporate $billions – perhaps just good PR for their share price!