The new mobility ecosystem's affect on the insurance industrywill be wide-ranging and complex, touching nearly every part of theinsurers' businesses, says a new report from Deloitte ConsultingLLP, "Insuring the future of mobility: The insuranceindustry's role in the evolving transportation ecosystem."

Published May 13, the report predicts that the evolution ofcustomers and products will transform the current passengerautomobile insurance industry, providing new opportunities whilesimultaneously eliminating some traditional ones.

Shifting customer needs and improvements in vehicle safety aretwo expected results of the changes in mobility, the report states,which will likely "reduce, reallocate or eliminate a substantialamount of today's insurance premiums."

The key factors driving these anticipated changes:

• A reduction in the total number of vehicles as consumers adoptcar-sharing and ride-sharing.
• A reduction in claim frequency as vehicles equipped with eitherpartially autonomous or fully autonomous capabilities comprise agrowing portion of the fleet.
• A shift away from personal auto to commercial and productliability-type insurance for shared autonomous vehicles.

Disappearing premiums — or shifting ones?

In an attempt to quantify the changes, Deloitte's actuarialpractice used several models to determine how the future ofmobility might impact loss events and total premium. The reportprojects that over the next 25 years, total auto insurance premiumneed could decline by up to 30% from current levels. The twoprimary factors responsible for the decline are the reduction infrequency of "loss events" and the decline in the total number ofvehicles due to the efficiencies gained by vehicle sharing.

The mix of coverages is also expected to change as self-drivingcars become more common. The report predicts that although theamount of driver liability and collision coverage will decrease,insurers will have an opportunity to provide product liabilityinsurance for AV manufacturers and shared-mobility providers. Forexample, as automakers introduce self-driving cars, productliability policies can be expected to increase as liability shiftsfrom human drivers to the autonomous vehicle system. Personal autopolicies are likely to decline steeply if not disappearcompletely.

The report also predicts that insurers and their distributionchannels (read, agents and brokers) are likely to start seeingslippage in personal lines over the next 10 years. As the adoptionof shared vehicles increases, the report projects the decline inpersonal lines to occur quickly and permanently. Insurers without astrong commercial lines underwriting capability now may be at asignificant disadvantage when the decline reaches its peak.

The authors also note that the direction and rate of change willdepend on a number of factors, including:

• Regulation.
• Social attitudes.
• Technological development.
• Privacy and security concerns.
• Key stakeholders' level of resistance.

Insurers will need to modify their product and serviceportfolios, the report says, as well as their go-to-marketapproaches and business models to effectively meet the unique anddistinctive needs of personal and commercial customers.

For more information or to obtain a copy of the report, visitDeloitte UniversityPress.

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