OAI: Report Highlights Politics' Role in Changing Auto Insurance Industry

New strategies, more political relationships needed as technology changes the marketplace, report says.

Las Vegas, NV, May 10, 2012 --(PR.com)-- A recent report from research firm Celent outlines the questions and reactions insurers would have after improving automotive technologies produce a likely drop in the number of crashes, emphasizing the political connections that companies should foster as the industry rapidly changes, according to Online Auto Insurance.

The best rated car insurance providers often write the biggest dollar amount in premiums but may have an especially complex time adapting to a scenario in which revenue drops significantly over the next decade, according to Donald Light, a senior analyst at Celent and author of the report, titled “A Scenario: The End of Auto Insurance, What Happens When There are (Almost) No Accidents.”

“In the long term, insurers with a significant amount of auto business have to grapple with some very challenging enterprise strategy issues,” Light said in a statement.

The report focused on four technologies—telematics, collision avoidance, automated traffic law enforcement and autonomous driving—that it says could lead to a significantly lower number of crashes.

That trend may already be taking hold, with the National Highway Traffic Safety Administration projecting that the number of traffic fatalities in 2011 will hit its lowest point in more than six decades. Fatalities “have been on a downward trend since 2005,” according to the NHTSA. January-to-September fatal crash volumes dropped 25 percent in the last seven years.

Source: http://www-nrd.nhtsa.dot.gov/Pubs/811604.pdf

Under the report’s scenario, fewer fatalities and crashes could consequently mean lower insurance premiums. Celent lays out the possibility that, between 2018 and 2022, private passenger auto liability premiums would fall 60 percent from 2012 levels and that physical damage premiums would fall 80 percent.

Insurers looking to survive shrinking business will be able to adapt by taking advantage of “opportunities to price and underwrite in a smarter way,” according to the Light.

An insurer should currently keep abreast of three topics, according to Light: how it monitors technology-driven changes in insured losses; the progress of technologies in changing analytics and providing new kinds of insurance data; and year-by-year strategies to plan ahead.

But the likelihood that the scenario will develop as predicted “depends primarily on political decisions.”

“Will the federal and local governments mandate and deploy those technologies given their very significant impact on how citizens and voters use motor vehicles?” the authors asked in their report.

Celent also suggested that political support for those technologies will be best gained by “value-oriented arguments invoking safety, security, and protection of the young and vulnerable.”

Strong partnerships between industry and government will accelerate change, according to the report. The best case for those changes may be made by companies with a strong public profile—and they could even come from outside the industry.

Nevada recently touted itself as a pioneer in driverless car development after the Department of Motor Vehicles approved a license application from Google permitting test-drives of its autonomous vehicle on public roads in the state.

Google’s license is the first its kind granted in the U.S. The tech giant has hyped its exploration into autonomous vehicles as its first shot in a battle to reduce roadway accidents and deaths.

The state DMV said that other auto manufacturers have indicated plans “to test and develop autonomous technology in Nevada in the future.”

Driverless cars are about a decade away from being mass-produced, according to the Celent report, which predicted “preferred use in 2023-27.”

Under the report’s scenario, vehicle telematics will be “mandated during the next five years,” as the information technology that records driving data is already voluntarily used by many motorists, according to the Celent report.

The report expects that automated traffic law enforcement and collision avoidance measures are expected be mandated sometime between 2018 and 2022.

For more on this and related issues, head to http://www.onlineautoinsurance.com/companies/ratings/ for access to an easy-to-use quote-comparison generator and informative resource pages.
Online Auto LLC
Charles Nguyen