United Kingdom

Insurance Innovation Can Unlock Opportunity for Future Mobility Business Models

Rather than a barrier to growth, the insurance industry can be a catalyst for businesses pioneering new mobility solutions says Aon’s Marc Spurling – Director of Future Mobility Strategy.


Technology and innovation are at the heart of the future mobility revolution. Whether you want groceries and snacks delivered in an hour; a car to go anywhere anytime; rent your car to earn from it rather than let it sit idle for 94% of its life; or grab that scooter to get you across town under your own steam; there is a mobility solution for you. And that’s only a fraction1 of the ways in which businesses are investing to solve the mobility needs of the global population to 2030 and beyond. Yet amongst this agility of thinking and ingenuity of new business models disrupting convention to break new ground, insurance is a common obstacle that can hinder development, slow expansion and create unsustainable financial burdens upon growing mobility businesses.

Insurance Hits the Bottom Line

For new digital mobility business operating models, insurance can account for between 60 – 80% of variable expense meaning it has a direct impact on the bottom line. Insurance markets and products have however, been slow to adapt to the changing demands and needs of these mobility innovators; hedging their bets and waiting for enough data to help them get comfortable in underwriting these risks. Generally, they are not agile enough when it comes to accepting the increasing volume of complex, instant, high quality and reliable data that these innovators have available. To unlock the potential of these business models, the insurance market needs to become an enabler of growth by embracing the availability of risk data to develop affordable, fit for purpose products for future mobility players.

New Energy Vehicles – Acceptance and Adoption Impacted by Insurability

Take new energy vehicles (NEVs), which consist of battery electric vehicles (BEVs) and the development of other clean fuel technologies, such as hydrogen. The relative newness of these technologies means there are not decades of data available to evaluate these new risks. This presents a challenge to insurance markets more comfortable with a well-trodden formula for underwriting risk on the back of historical trends. The result is reduced insurance capacity and increased premium cost as these uncertainties are factored into pricing decisions.

Utilising the power of connected car data can change that. Selecting insurance partners who are open to evaluating risk in new ways, using data to create pricing models and who have a forward-looking outlook is vital. NEVs need insurance partners who can evaluate the risks of these technologies with fresh thinking, using available data and understanding safety features in order to accurately present the true risk to the insurance market.

As technology continues to improve the quality of battery life, for example, data can be used to help users adapt to best practices in maintaining battery performance, support proactive maintenance and demonstrate durability2. Aon has worked with specialist markets to develop solutions to support extended battery warranty for manufacturers and the provision of embedded insurance products to NEV’s supporting their market entry and growth aspirations.

Insuring the Future of Autonomous Vehicles

Turning to autonomous vehicles (AVs) – which have the potential to revolutionise mobility with the prospect of safe, efficient transit of people and goods – solving the insurance challenges affecting the key AV players (original equipment manufacturers, artificial intelligence software providers and operators) will be critical to enabling widespread deployment. The insurance market must innovate to meet the liability complexities arising from these new business models. Taking a traditional insurance approach, with insurance policies that cover single areas of risk – such as third-party liability or vehicle damage – will not deliver effective solutions for producers, operators, or users of AVs. They will be costly and will most likely create conflict between the areas of insurance coverage, slowing down claims payments while stifling collaboration and development.

Blended Insurance Products

To avoid these pitfalls, the insurance market will need to adapt to the development of blended or composite insurance products to represent the true nature of product liability, software design risks, cyber hacks, third-party property damage and injury risks to passengers and other road users amongst others. In addition, mechanisms for managing claims efficiently and effectively will need to be developed. The causal features of claims will fundamentally change and require specialist handling utilising technical expertise that understand the different risk features. Achieving this will require new collaborations between the insurance market, AV players and trusted third parties to use new streams of available data to show the true risk profile and resulting insurance costs using innovative rating models based on a deep understanding of the technologies and their capabilities.

Insurance that Mirrors the Disruptive Mindset

Global mobility is undergoing a major inflection point, not seen for over 100 years. The disruptors shaping the future mobility landscape are digital natives powered by technology innovations redefining the way mobility is delivered, consumed, and priced. These players demand partners that have agility, align with their technology, and can deliver solutions that enable their growth pathway. To get on board, the insurance market needs to adapt and mirror this disruptive mindset, embrace the challenge, and deliver solutions that fit future mobility business models.


1 Source: McKinsey Growth Analytics–Horizon Scan; CapitalI; Pitchbook; McKinsey Growth Analytics–Innography
2 Autocar Electric. James Disdale What is the battery life of an electric car, 26 January 2023 “while performance may degrade over time, ultimately the cells should still be providing at least 70 percent of their capacity even after 200,000 miles. As an example, a number of Tesla Model S taxis operating from Gatwick airport racked up over 300,000 miles each over three years, with all retaining at least 82 percent of their batteries’ health”.


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This article has been compiled using information available to us up to 21/03/23 and was originally published on movemnt.net.

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