Disruptive Innovations and New Growth Hubs in the US Automotive Usage-based Insurance Sector
Transformational growth enabled by connected data ecosystems drives new insurance models
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For decades, automotive insurers have based underwriting on historical driver data and demographics. Drivers were forced to settle for one-size-fits-all policies that did not take into account their driving habits or miles driven. This began to change with the emergence of real-time tracking of vehicle and driver behavior with vehicle telematics. The proliferation of telematics technology-enabled new relationships to be formed between insurers, telematics service providers (TSPs), original equipment manufacturers (OEMs), and customers. In this new ecosystem, TSPs provide hardware and data lakes that allow insurers to improve risk assessment and automate manual processes, thus providing massive operational savings. OEMs can start to monetize their pools of vehicle and driver data as they have become crucial inputs for insurers while customers willing to share their data benefit from personalized policies with lower premiums. The net sum of these new relationships yields higher margins for insurers while TSPs and OEMs capitalize on double-digit growth of white space opportunities.
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