The future of personal mobility

The future of personal mobility
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Key Takeaways

The way we understand our roads is rapidly changing. Thanks to new breakthroughs in personal mobility, the role of the traditional car, and the traditional insurance model, is shifting. Bike shares, electric scooters, ride-hailing apps, and autonomous vehicles are claiming more space on our roads than ever before.

But what does that mean for insurance companies? Fewer vehicles on the road mean fewer policies for insurers to write. And narrower profit margins for the industry at large.

So, what trends threaten the traditional insurance model the most, and what will insurers need to consider to stay competitive?

Let’s take a look!

New personal mobility, new realities

People used to have fewer personal mobility options. If you wanted to travel somewhere, your options were pretty much public transit, a bicycle, or your car.

But that’s changed, thanks in no small part to the explosion of new personal mobility options. In cities all across the United States, the traditional means of transportation now have serious competition. Electric scooters like Bird, bicycle sharing services like Lime, motorized unicycles like Ninebot from Segway, electric skateboards like Atom, and of course ridesharing services like Uber and Lyft have all cut into the automobile’s market share.

And they will continue to. According to a report by NPR, the number of American 19-year-olds with driver’s licenses has fallen by 21% since 1983. This is due to several factors. First, they have more personal mobility options than ever before, as evidenced above. Further, more Americans live in cities than ever before, where big, personal automobiles aren’t necessary. And finally, 43% of Americans now work remotely at least part of the week. That number will grow, and it is eliminating the typical commute, and the need for a vehicle to perform it.

Autonomous vehicles

But perhaps no other single force is threatening the traditional insurance model, and the superiority of the personal car, more than autonomous vehicles (AVs).

According to a report by Mic, the rise of autonomous vehicles could mean as many as 200 million fewer cars on the road by 2030. AVs can be more readily shared (and used by other passengers when not in use by another). That’s why each individual AV is expected to replace several privately owned cars.

Of course, with 200 million fewer vehicles on the road, this raises several challenges for insurers.

Traditional insurance model challenges

The main concern this new mobile future raises for insurers involves policy underwriting and risk.

Traditional insurance model profits depend upon the “pool,” wherein the abundance of generally safe drivers paying premiums and rarely filing claims more than covers the number of risky drivers to whom the insurer must pay out. But with many otherwise “safe drivers” now abandoning cars altogether, this math is changing. Fewer drivers means fewer policies, and smaller profit margins.

What’s more, since vehicles will have far more “uptime” on the roads – thanks to shared ownership and the car not needing to wait parked and unused – the likelihood of an eventual collision increases. Plus, since each individual car will stay on the road for a longer lifecycle, the odds of multiple, increasingly costly collisions over the life of the vehicle goes up, as well.

The solution for insurers: Data

Which is exactly why insurers need a smarter, data-driven way to underwrite vehicles going forward.

As we’ve discussed on our blog before, the more artificial intelligence-enabled insights you can glean from mounds of driver data, the more accurately you can predict driver behaviors, and mitigate risks.

Zendrive has compiled over 150 billion miles of driver data – more than the rest of the industry combined – and our AI is already enabling insurers to make smarter decisions with their policies. With far more granular insights and specific data linked to each individual driver, not just “similar type” drivers, insurance companies are able to offer highly competitive rates to safe drivers, and are able to better avoid losses on risky drivers.

This is huge for insurers for two reasons. First, it maximizes profits by limiting risk. Secondly, it allows them to offer competitive rates to an increasingly shrinking pool of policyholders. These customers will continue to have insurers competing for their business more and more.

By leveraging data from the Zendrive platform, insurers can prepare for a future of changing personal mobility, and continue to thrive in a world of AVs.

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