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Global Automotive Insurance Market 2021 – In-vehicle Electronics to Drive New Connected Vehicle Insights

The automotive insurance industry has witnessed a rapid transformation over the last few years to become a smarter industry. The traditional one-for-all approach in terms of premium rates is becoming a thing of the past. Insurance rates today are driven by algorithms that are based on a number of factors that capture the true cost of risk. This provides significant cost savings to both the insurance firms and the insured.

These changes in the automotive insurance industry can be largely attributed to innovations happening within the mobility space. Technological evolution has brought about disruptions in mobility, resulting in connected, autonomous, shared and electric (CASE) solutions. This, in turn, has resulted in new types of risks in the mobility landscape that needs to be covered by insurance, thereby making traditional insurance solutions redundant and further requiring a change in the way insurance is assessed.

Currently, the connected vehicle space is driven by telematics and data-driven models that create new insights on driver behavior. This has also led to smart/digital accident detection and first-notice-of-loss (FNOL) solutions that enable more accurate real-time claims. With innovative shared mobility models set to become more normative, firms will look to capture multiple risk periods and scenarios to provide insurance cover by the minute.

The market for insurance for electric vehicles (EVs) is still in a nascent stage. As the market evolves, it is likely to lead to more data surrounding EV battery performance and fires, lower component costs, and a developed used-part and aftermarket channel, all of which will attract innovative insurance business models.

The autonomous vehicle (AV) market is currently largely untapped. Beyond 2025, with regulations kicking in, the market for AV insurance will take shape, largely driven by the new autonomous safety features that will cause significant changes in terms of calculations for premiums and regulations surrounding liability in case of an accident.

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