#19-Digital Ecosystems Playbook- Un-bundling Insurance and Auto Tech landscape

Think about the current state of customer satisfaction and speed in the auto insurance industry. The customer has to buy the insurance online/offline and the inspection agent has to come to visit and verify the claim before it can be processed. The pain points also exist for the insurance companies as well. The premium is determined by the condition of the vehicle, rather than the driving mannerism of the person behind the wheels.

As per CB insights report, over 2 billion USD funding was done in 2017 and 2018 in the insurance tech deal space. Definitely, this will give boost to a lot of interesting startups that can disrupt the insurance industry by removing the in efficiencies. The vehicles and on-demand apps are generating so much data that can revolutionize the business.

Imagine a scenario in 2025-2030 when the world has two major modes-

• pre insured autonomous vehicles or cabs,
• or the owned cars.

1. Autonomous vehicles- Currently in 2018, as per the conservative estimates there are over 50 million riders who daily use on- demand cabs like Uber, Lyft, Didi Chuxing, Grab, Ola etc and the number can be as high as 100 million. Didi Chuxing alone clocks over 30+ million rides daily. Imagine a scenario in 2025-2030 when about 25-30% of these vehicles are autonomous vehicles which would be mean that about 25 million plus autonomous vehicles would be there at very conservative estimates. Every trip in a self driving car will come equipped with an option to choose insurance on per ride basis at a very minuscule amount. Users will feel much safe with insurance products that may compensate delay or car break-down in addition to other scenarios etc. The adoption rate may go up too for the autonomous vehicles, thus everyone wins.
2. On-demand cabs - Imagine the other 70% non-autonomous vehicles driven by usual cab drivers. It will be fair to let the insurance premium is determined by the ratings of the cab driver and not just the age of the vehicle. Data generated from the app, sensors on the cab can give a good idea about the drivers safety records. The user benefits by paying a very small amount of premium included in the cab ride, and the cab company can pass or share the premium burden entirely depending upon the state of the competition.
3. Owner vehicles- The number of auto insurance product choices available will go up significantly and the insurance burden may come down to pay per use basis. You may not be required to pay the insurance for a parked or unused vehicles. Also the drivers safety record will also play a crucial record along with the average of city drivers safety records patterns and number of vehicles. If you live in a city where the rate of auto related accidents are high, then the premium may be higher.

How will the claim process gets transformed with advent of AI/machine learning and shared-economy: Imagine a hypothetical event, Angela and her friends get in a minor auto accident on a freeway.highway. As per the current claim situation, an inspection agent has to verify the claim before sending the car to the service center, but this may soon change.

As soon as there is an accident alert a series of processes will kick in automatically-

• The first priority will be to ensure safety of passengers by sending data to near by hospitals, Angela's friends/family circle, and police station. The passenger of course can control the situation by pressing an option -"no help needed" or "marking safe" kind of messages. An alternative transport will be arranged for the passengers for their original destination or any other place they prefer to go for medical aid.
• Instead of an FTE who plays insurance inspector, maybe an Uber driver dropping a passenger near by can be trained on the inspection mechanism. The person immediately rushes to the point of hypothetical accident and follows a procedure of taking necessary pictures/videos of the situation. There could even be some pre-installed sensors on the car, that can give some data to the insurance company to accurately study the reasons that led to the accident. The data and pictures are then sent to an AI system/algorithms, that already has been trained on thousands of data points/pictures to assess the damage. Within few minutes it is able to generate the approved insurance amount, which is then texted to the customer. Imagine the level of customer satisfaction in such a scenario. An inefficient process that takes, few days currently will come down to matter of few minutes. The cost of claim processing will also go down significantly for the companies.

The best thing about digital ecosystems is that they generate value by removing inefficiencies and delays that exist in any industry. Digital ecosystem playbook is all about using the technology stack and forming right partnerships that complement your business (auto-tech and insurance).

Sidhartha Sharma

(Views are personal)