Could Driverless Cars Completely Stuff Australia’s Insurance Industry?

Could Driverless Cars Completely Stuff Australia’s Insurance Industry?
SHARE
THIS



As B&T reported on Monday, the Commonwealth Bank has reported that it expects to see 10 million driverless cars around the planet over the next four years.

But what happens to insurance companies if these cars – that reportedly take all human error out of driving – do become mainstream? Or if a digital giant with strong customer relationships — say, Amazon — began selling insurance?

These scenarios are among a handful of threats identified by management consultancy McKinsey & Company which could potentially alter the products, pricing and service models offered by property and casualty (P&C) insurers.

Another uncomfortable thought for the industry incumbents is the possibility of a data aggregator, backed by a third-party investor, launching a new insurer which draws on new sources of data to develop much more accurate underwriting and pricing models.

McKinsey’s article, Making Digital Strategy A Reality In Insurance, published this month, notes that the traditional insurance business model has proved remarkably resilient so far — thanks to regulation, product complexity and large capital requirements. However sources of disruption are emerging.

Autonomous or semi-autonomous cars, connected home devices and sharing economy businesses such as Uber, AirBnB, are reshaping the products offered by insurers. Usage- and behaviour-based pricing are made possible by rich customer data, telematics, and enhanced computing power, while the claims process is being altered by automation, analytics, and consumer preferences — enabling insurers to improve fraud detection, cut loss-adjustment costs, and eliminate many human interactions.

The authors note, “No single competitor or innovation poses a threat across the entire value chain, but taken together, they could lead to the proverbial death by a thousand cuts: many small disruptions combining to fell a giant.”

According to McKinsey, P&C insurers in the top quartile for digital performance are achieving twice the growth rate of their less digitally advanced peers and delivering better profitability at the same time.

McKinsey insurance The P&C industry lags in digital sophistication, McKinsey said. However, insurers are experimenting with many different approaches to digital. Early areas of focus are connected cars or connected homes. The challenge insurers face is deciding where and how to focus in order to establish or maintain a competitive edge.

“To succeed in this new landscape, insurers need to take a structured approach to digital strategy, capabilities, culture, talent, organisation, and their transformation roadmap,” the report states.

“Digital strategies most frequently fall short when they lack a clear vision of the sources of value in digitisation and digital innovation.” Insufficient investment or a failure to adjust organisation structures to reflect digital’s importance leads to a lack of talent.

“What all successful digital transformations share is a sustained commitment from senior management, a shared long-term vision, a willingness to transform the culture and operating model, and the tenacity to persist through the difficulties that accompany any organisational effort of this magnitude,” the report says.

This article originally appeared on B&T’s sister business site www.which-50.com and was authored by the site’s editor Tess Bennett.

Please login with linkedin to comment

Advertising Standards Bureau Ann Lewnes Blackmores einsights PRIA

Latest News

Mark Zuckerberg, chief executive officer of Facebook Inc., listens as Narendra Modi, India's prime minister, not pictured, speaks during a town hall meeting at Facebook headquarters in Menlo Park, California, U.S., on Sunday, Sept. 27, 2015. Prime Minister Modi plans on connecting 600,000 villages across India using fiber optic cable as part of his
  • Technology

“No F*cking Way!”: Pink Floyd Frontman Refused To Give Mark Zuckerberg Rights To Song

Roger Waters, co-founder of Pink Floyd, said he refused to give Mark Zuckerberg the rights to use hit song Another Brick in the Wall (Part Two). Waters was speaking at a pro-Julian Assange event when he said that he had been offered a “huge, huge amount of money” for the use of the 1979 hit […]

by B&T Magazine

B&T Magazine
Accor Celebrates Aussie & NZ Cities With New ‘Go ALL Out’ Campaign
  • Campaigns

Accor Celebrates Aussie & NZ Cities With New ‘Go ALL Out’ Campaign

Hospitality giant Accor is shining a light on the joy of cities through its newest campaign, ‘Go ALL Out’, which launches in Australia and New Zealand today. The gateway to the ‘Go ALL Out’ campaign is ALL – Accor Live Limitless, a lifestyle loyalty program that integrates rewards, services and experiences throughout the Accor portfolio […]

Marketing Firm Silverbean Set To Double Headcount To Support New Client Wins
  • Marketing

Marketing Firm Silverbean Set To Double Headcount To Support New Client Wins

Global affiliate and partner marketing firm Silverbean has secured new contracts with 13 major Australian brands and is now working to double the size of its Asia-Pacific team. Silverbean launched in Australia in 2019 and has seen steady growth through its work with retailers. Now, with 15 new brands joining the Silverbean portfolio, the agency […]

Xandr Launches New Guide Exploring The Future Of Identity
  • Advertising
  • Technology

Xandr Launches New Guide Exploring The Future Of Identity

Xandr, AT&T’s advanced advertising company, today released “Shaping the Future of Identity,” an industry guide exploring the approaches for buyers and sellers, as well as market participants, as they evaluate identity solutions in preparation for a future without third-party cookies.

GTI Appoints New GM Of Marketing & Strategy, Snares Fresh Client
  • Marketing

GTI Appoints New GM Of Marketing & Strategy, Snares Fresh Client

Tourism PR and marketing agency GTI has announced the appointment of longtime media executive Jenny Pham as its new general manager of marketing and strategy. Pham (pictured above) will lead the agency’s marketing division with responsibility for strategy, media and consumer marketing, while GTI founder and managing director Sarah Anderson remains as the day-to-day lead […]

Hospitality Networking Platform Clipboard Launches Equity Crowdfunding Campaign
  • Campaigns
  • Marketing

Hospitality Networking Platform Clipboard Launches Equity Crowdfunding Campaign

Clipboard, a free professional networking platform for the hospitality industry, has announced it will seek to raise its next round of funding via equity crowdfunding platform Birchal. This will power its vision to transform the way the fragmented hospitality industry connects, shares experiences, markets and recruits. With a growing member database of over 24,000 hospitality […]