The Covid-19 health crisis, which has disrupted the behavior of policyholders and widespread teleworking, has accelerated the transformation of automobile insurance, which has been in the making for a decade.
The technical balance quickly regained after the pandemic encouraged insurers to invest massively in new technologies. Global insurance leaders including Ping An (China), Allianz (Germany), AXA (France), Zurich (Switzerland), All State and Geico (United States), supported by reinsurers Munich Re, Swiss Re and Hannover Re, play a key role in the development of automobile insurance.
Their contribution is manifested in several strategic and operational aspects, ranging from innovation to regulation, including risk management and improving the customer experience.
Car insurance: personalization of the offer
Teleworking, introduced on a large scale during and after Covid, has led to fewer commutes. This measure pushed insurers to review and expand their offers.
Usage-based auto insurance is gaining ground. This model which adjusted premiums according to mileage or driver behavior is experiencing new growth, with policyholders wanting premiums to reflect their actual use of their vehicle. Such adjustments allow prudent drivers to benefit from price advantages. This model is becoming more and more popular, especially with the success of connected cars.
Since then, innovative solutions have continued to emerge. The use of Big data and telematics, which makes it possible to monitor driving habits via devices installed in vehicles, or mobile applications offer more flexibility to insurers to adjust premiums to the risks and needs of their customers.
Car insurance and the rise of electric cars
According to the International Energy Agency (IEA), the adoption of electric vehicles is on track despite tariff barriers, rising customs taxes and the introduction of protectionist measures against Chinese manufacturers. The IEA estimates that more than 20% of vehicles sold worldwide in 2024 will be electric. This rate would rise to 48% in 2030.
The global fleet of electric vehicles in circulation is currently estimated at 45 million, half of which circulate in China. To date, 31 countries including 18 from the European Union have adopted this type of vehicle.
The future of the electric car depends on the innovation of manufacturers, the improvement of vehicle performance, especially in terms of autonomy, price and tax advantages.
Concern for insurers, the loss ratio for electric vehicles could prove to be high. In the event of an impact, the aluminum bodywork, although light, would require the intervention of specialized bodybuilders. Additionally, battery-related repairs could represent up to 50% of the vehicle’s price.
Increase in vehicle value
With the rise of 100% electric and hybrid cars, the introduction of new technologies and on-board systems, the value of new vehicles continues to increase.
In one year, some brands like Skoda, Toyota and Volkswagen recorded an increase in the value of their vehicles of more than 15%.
Automobile insurance and the development of autonomous and connected vehicles
The emergence of autonomous and connected cars is leading to a major transformation in the auto insurance sector.
According to the research firm Counterpoint, 50% of new cars currently sold worldwide are connected to the Internet and equipped with information and communication services.
AI-enabled vehicles provide opportunities to improve operational efficiency, better manage risks and detect anomalies. They potentially reduce the risk of accidents, but also raise complex questions related to the problem of finding liability in the event of a disaster. Indeed, in the event of a damaging event caused by a connected car, several parties may be held liable: vehicle manufacturer, driver, subcontractor, manufacturer of one of the software fitted to the vehicle, equipment manufacturer, etc. .
This is indeed a new technological reality to which insurers must adapt.
In 2021, the global fleet of connected vehicles amounted to 236 million units. It reached 350 million in 2023 and is expected to exceed 400 million in 2025.
According to Autopromotec Observatory, an American firm specializing in the study of connected vehicles, projections for 2027 show a market of more than 640 million vehicles of this type.
Car insurance and artificial intelligence integration
The use of mobile applications and digital tools such as Chatbots has become commonplace among automobile insurers called upon to manage and price risks. These applications facilitate underwriting, contract management, claims processing, damage estimation from images and fraud detection.
Connected objects, telematics boxes, and other smartphones constitute working tools essential to the proper functioning of insurers’ operational models. They allow real-time access to information (driver behavior), an improvement in the customer experience (tailored coverage and individualized pricing), a better understanding of risks and rapid management of claims.
Thanks to the use of artificial intelligence, a Ping An policyholder can report a claim online, upload photos of the damage and receive an automatic assessment of the claim within seconds. For a low-value claim, compensation is then immediately transferred after confirmation by facial recognition.
The use of blockchain is also a great contribution to the insurance market. It allows rapid and clear management of voluminous data flows, while ensuring the traceability and security of information and transactions linked to a disaster.
The price increase
Since 2022, the general trend has been an increase in car insurance prices in many countries. The United States, Canada, United Arab Emirates and Germany saw significant tariff increases. In France, this increase has remained moderate over the last two years (+7% over two years). It will probably experience a sharp increase, up to 6%, in 2025.
After a sharp increase in prices in 2022 and 2023, the United Kingdom and Saudi Arabia (+50% to 100% for automobile liability) recorded a drop in automobile prices in 2024.
Below is a brief overview of the 2023-2024 price developments in certain markets.
| Pays | 2023 | 2024 |
|---|---|---|
Source : Atlas Magazine
At the global level, apart from 2020, the year of Covid-19 and 2022, the year of the post-Covid economic slowdown, the average premium subscribed per capita (total global premiums compared to the world population) is growing regularly.
This average premium increased from USD 215.9 in 2017 to USD 253.2 in 2024, an increase of 17% over seven years.
