Even though driverless vehicles might seem like the stuff of science fiction, they are closer to materialising than many think possible. But what impact will this have on car insurance? Beyond that, technology has evolved at such a rapid rate that the way insurance products are developed has fundamentally changed. Indwe Risk Services discusses what this means for consumers.
“Thanks to the arrival of ride-sharing services, some South Africans are selling their vehicles and relying on this technology to get them from point A to point B – forgoing car insurance completely.
Realistically, this is not feasible in a country where travelling long distances is the norm, and owning your own vehicle is essential. However, insurers are looking at more innovative ways of packaging products to cater for a more connected customer base,” says Joe Szemerei, Executive Director, individual and volume business at Indwe.
With many local insurers using telemetry from devices that track driving behaviour, monthly insurance premiums can either be increased or decreased as the risk profile changes. Impact detection can also alert the insurer (and medical schemes) to dispatch help automatically, thereby minimising what a driver must do when disaster strikes.
“These are considered standard offerings in a digital environment driven by real-time data analysis. Even so, pay how you drive and pay as you drive models do provide customers (and the insurers themselves) much-needed flexibility to become more cost-effective. It is the risk versus reward argument when it comes to the willingness to share data (such as how you drive) but getting a reduced premium in return.”
Insurers have also embraced mobile apps to empower customers to more dynamically tweak their policy as their needs changes. Some of these apps can also be used to improve the efficiency of a claim by letting the customer photograph an accident, uploading the information, and the insurer automatically assessing and managing the pay-out.
“But incumbents are not necessarily having it their own way. The increase in insurtechs mean product innovation must be a driving force. And the winners throughout all this continue to be the customers, as they can more easily move between providers as their expectations and needs evolve.”
There is a caveat to this of course.
As cars become more sophisticated and use more advanced technologies, so too will the cost of repairs and even maintenance increase. So, while some argue that these technologies reduce the frequency of accidents and therefore claims, when they do occur, the high repair costs will still need to be factored in.
“We are not likely to reach a point where insurance payments will be negligible, instead it will be a case of offsetting technology innovation with repair costs and evolving driver demographics based on driving behaviour. Sure, flying cars might not be on the horizon, but with self-driving vehicles around the corner, it is best to be prepared for an exciting future for insurers and their customers alike.”
For more information on accessing customised car insurance products, please visit www.indwe.co.za or contact 0860 13 13 14.
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