Digitally-enabled motor insurance policies in Europe could potentially be valued at €15 billion by 2020, according to Deloitte, the business advisory firm.
Digitally-enabled motor insurance policies are the next step in telematics-style insurance. With telematics, people share their driving data with their insurer in return for discounted policies. With these new policies, people opt to share more data through digital platforms, such as smartphone apps, with their insurers for tailored services.
These services can include free roadside assistance, or car care services once a driver has accumulated a certain number of points for safe driving.
Deloitte’s research says 50% of surveyed motor insurance customers would share their driving data in return for these additional services. With high take-up of telematics in certain EU countries, this suggests good prospects for digitally-enabled insurance to take off.
David Rush, Deloitte UK’s head of insurance, said: “This year’s survey showed a 20% rise in the number of customers willing to switch their insurance policy. When this ‘switchability’ is combined with people’s readiness to share their data and the rise of connected devices, the prospects for change in insurance are significant.
“The potential development for digitally-enabled motor insurance is highest in Italy, the UK, France, Germany and Spain. Currently, there are over 4.5 million telematics insurance policies in Italy, which account for 15% of the market. Our research shows Italian consumers are the least reluctant in Europe when it comes to data sharing, meaning this figure could rise to 27% of the market by 2020. In the UK, there are over 450,000 telematics policies at present, representing less than 5% of the market. We think this could increase to 23% by 2020 with digitally enabled insurance products.”
While price is a major sales point for telematics insurance, Deloitte’s research states this won’t be the only key focus for new insurance policies in future.
Peter Birch, financial services partner at Deloitte in the North East, commented: “Digitally-enabled motor insurance is on its way to becoming an important offering in all European countries. Customers are also ready for a new insurance product where insurers would be more than just a risk carrier or a company that offers discount-based polices. We could see new policies that not just include traditional motor cover, but also services like automatic emergency assistance or theft and recovery notifications, depending on the driver’s needs. Insurers who follow this path could emerge as winners in a redistribution of the market for motor policies.”