Adoption of Telematics Insurance Will Boost the Global Motor Vehicle Insurance Market Through 2020

Technavio’s latest report on the global motor vehicle insurance market provides an analysis on the most important trends expected to impact the market outlook from 2016-2020. Technavio defines an emerging trend as a factor that has the potential to significantly impact the market and contribute to its growth or decline.

The top three emerging trends driving the global motor vehicle insurance market according to Technavio research analysts are:

• Implementation of advanced analytics tools to reduce fraudulent claims
• Product innovation
• Use of telematics insurance

Implementation of advanced analytics tools to reduce fraudulent claims

According to the National Insurance Crime Bureau (NICB), insurance fraud is the second biggest white-collar crime in the US after tax evasion. Advanced tools, such as big data analytics and geospatial analysis, are making it easier for insurance companies to reduce losses stemming from fraud claim. Technavio expects top insurers to form partnerships with analytics services providers to speed up payment processes and improve customer satisfaction during the forecast period.

“Currently, insurance companies are examining patterns in claim historical and industry data to identify common frauds. Advanced analytics tools such as social media analytics and text mining will fasten the process of drawing inferences from unstructured data and will help to identify fraudulent claims accurately in the coming years,” says Bharath Kanniappan, a lead research analyst at Technavio.

Product innovation

The companies that are offering non-life insurance, including motor vehicles, have started offering several add-on covers. This is because customers are not satisfied with plain-vanilla policies and demand features such as zero depreciation motor insurance cover, return to invoice cover, and enhanced personal accident and hospitalization coverage. Top vendors are also offering innovative covers that are inclusive of all vehicle models.

Many insurers are also providing theft cover, in which the company pays the insured declared value (IDV), the depreciated price of the car depending on its age, or return-of-invoice cover, where the full showroom price is paid to the customer.

“Another trend that is likely to drive the market is assistance services offered by insurers, such as towing, garage cash, fuel assistance on a highway, no-claim bonus, spot repairs, medical assistance, and alternate car for alternate conveyance,” says Bharath.

Use of telematics insurance

Telematics insurance, where a telematics or a black box is fitted in passenger or freight vehicles, is gaining popularity in developing and the developed countries. Motor insurance in the modern day is not considered comprehensive in the absence of telematics insurance.

When a person buys a telematics insurance policy, the company fixes a telematics box that contains a SIM card in the vehicle. Using the data transmitted by the box, the insurer can review the driver's on-road behavior and help him or her improve their driving skills. Some insurers offer bonus points to buyers that drive safe and such points can be redeemed during policy renewal.

The usage-based telematics insurance offered are PAYD, PHYD, and pay-per-mile. Telematics insurance policies also help police forces to track the vehicle in case of theft; help identify any safety concern; and offer information needed for crash forensics. Therefore, we expect telematics insurance to trigger a paradigm shift in terms of improved portfolio management during the forecast period.

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About Technavio

Technavio is a leading global technology research and advisory company. The company develops over 2000 pieces of research every year, covering more than 500 technologies across 80 countries. Technavio has about 300 analysts globally who specialize in customized consulting and business research assignments across the latest leading edge technologies.

Technavio analysts employ primary as well as secondary research techniques to ascertain the size and vendor landscape in a range of markets. Analysts obtain information using a combination of bottom-up and top-down approaches, besides using in-house market modeling tools and proprietary databases. They corroborate this data with the data obtained from various market participants and stakeholders across the value chain, including vendors, service providers, distributors, re-sellers, and end-users.

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