By 2035, connected car technology is expected to shrink existing personal lines auto premiums by as much as 44%. To fill the gap, carriers will have to go where the opportunities are: a whole new world of commercial lines. Shane Cassidy, the executive vice president of Capgemini's Global Insurance Business Unit, discusses the ecosystem and infrastructure enhancements insurers require to do that.
According to Capgemini, urban adoption of multi-modal, micro-mobility, and shared modes of transportation could hit 58% in 2025, up from 29% as recently as 2023. Through 2030, premiums for connected, autonomous, shared, and electric (CASE) vehicles are poised to grow eightfold to more than half a trillion US dollars. Much of this will be driven by coverage models that toggle between personal and commercial auto insurance as liability moves between the driver and the OEM at the push of a button, and new Mobility-as-a-Service (MaaS) offerings that cover journeys instead of just the vehicles used to complete them.
With 70% of consumers worldwide expected to reside in cities by 2050, this concept will only grow. By 2040, as much as $160 billion in current personal lines premiums could evaporate, even as revenues for these emerging commercial models trend upward.
"Mobility-as-a-Service is an opportunity to fill coverage gaps," says Shane, pointing to a typical day for urban commuters. "Somebody wakes up, they get a personal car to the train station, they take a train downtown, then they take an Uber to their office. And when they leave that office, instead of grabbing an Uber, they grab a scooter, they get to the train station, or they go out to dinner, and then take another mode there to complete the trip. Over the next five years, that market's going to triple."
For insurers seeking to tap this growing opportunity, the future of mobility is about one thing above all else: the ability to leverage exponential amounts of real-time data from a rapidly expanding universe of sources. This will include data piped in from in-car systems and smartphone-based apps. But insurers will also need ecosystems to draw and utilize data from public transportation systems. Part of this will be for new forms of coverage, but it will also be used in the event of a claims-triggering event.
"The purest truth is that the future will be data-driven and agile in every way," says Cassidy. "Products will evolve faster and faster, pricing more individualized. Sensor data will become ubiquitous to lower the risk, and embedded insurance is inevitable. And I personally don't see a path toward achieving that without cloud at the center." Indeed, a cloud-based insurance platform that combines core, analytics, digital, and powerful forms of AI to integrate with mobility ecosystem partners like car manufacturers and third-party data and service providers will be key.
On a more personal level, there's another aspect to this that holds a strong appeal for Cassidy. "Modernized mobility unquestionably has a positive impact on sustainability," he says. "Certainly, movement to the cloud in a core system or across an entire ecosystem is having a huge impact. The move toward electric vehicles, the move toward more sustainable mobility solutions. I just think that it's inevitable." Listen to the full InsurTalk interview with Shane Cassidy here.