Agents and brokers who rely on automobile insurance to drive penetration into other products may need to re-evaluate their strategies as autonomous vehicles edge closer to reality, a new Deloitte report suggests.
According to the analysis – released as part of Deloitte’s ongoing “Future of Mobility” initiative – producers and direct channels remain the primary outlets for personal auto policies. Yet as autonomous features make driving safer, that market is poised to shrink, threatening agency business models as surely as it does carriers’.
Total auto insurance premiums are projected to decrease by up to 30% from current levels over the next 25 years, as ridesharing and autonomous technologies take root. Because these developments limit the possibility for human error, liability will shift to manufacturers and the need for individual coverage will likely shift to a simple property policy – something that could easily be sold by non-traditional partners.
“For example, insurers could…partner with credit card companies to offer ridesharing insurance coverage as part of a core or premium service,” Deloitte wrote.
That leaves insurance agencies with a good deal to rethink in terms of how they train new producers and how they approach cross-selling opportunities, said John Matley, a member of Deloitte’s Future of Mobility initiative.
“If auto liability is more of a commercial product going forward, it will potentially impact agents and the distribution force in general,” Matley told Insurance Business America
. “The reality is that as distribution evolves, potentially homeowners becomes a lead line instead of auto – especially if we’re looking to reduce the frequency and severity of losses in auto.”
Agencies should also work to strengthen their commercial relationships, as they will be better prepared to serve the new market for auto liability insurance than those whose primary focus is on the individual owner.
Deloitte believes that while agencies will continue to be the primary distributor for insurance for personally owned autonomous vehicles, these changes in strategy will be critical to their continued integrity in the industry.
“Notwithstanding the potential narrowing of traditional channels, shared mobility and autonomous vehicles create fresh opportunities for the sale and distribution of auto insurance,” the paper said.
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