By Ernest North
Car insurance is changing as digital innovation and the pandemic reshape how we live, work and drive. Thanks to digital technology, you can benefit from better pricing, more transparency and more convenience in your insurance experience. And things are only going to improve as new digital innovations come to market.
Here are some of the trends we expect to see unfold in car insurance over the year to come:
1. New ideas about owning cars and getting about
Following the hard lockdown in 2020, many of us were forced to work from home. That worked out so well that many companies and people are not planning a full-time return to the office. For that reason, many families are wondering whether they really need two cars in the driveway. After all, petrol prices are climbing, money is tight, and Uber offers a cheap and reliable way to get around if you’re not commuting every day.
Now that we’re not driving around as much as we used to before the pandemic, it’s a good time to rethink car ownership. More and more people are downsizing their second car to a smaller and less costly vehicle, delaying the replacement of their car, or even selling one of their cars because they don’t drive that much anymore. And if you decide not to ditch your second vehicle, you’ll want to get an insurance policy that lets you pay less during the times you’re not driving a lot.
2. Buying your car and everything that goes with it online
According to World Wide Worx, South African ecommerce retail sales totalled R30.2 billion in 2020 – more than double the R14.1 billion achieved in 2018. The explosive growth is largely thanks to Covid and social distancing, together with accelerated investment in the technology that enables ecommerce. Now that people are more comfortable with shopping online for groceries, they’re also more interested in buying larger things like cars and insurance via a website or app.
We can expect exciting developments in online car retail in South Africa in the next year or two. We may see online dealers and marketplaces make it simple for you to compare financing offers, vehicles and insurance, then get it all in one place. In future, you could complete a car purchase online, from researching your options and applying for a loan, to ordering the car and getting insurance cover.
Perhaps you’ll shop for cars by reading reviews and viewing ultra-high-definition videos, only booking a test drive once you’ve chosen a car and want to confirm your decision. This has the potential to put you in complete control of your experience – car dealers, lenders and insurers will all need to up their game in terms of pricing, convenience and transparency to win your business.
3. Smarter cars
Today’s cutting-edge cars, particularly the high-end electric vehicles from the likes of BMW and Tesla, resemble smartphones as much as they do traditional cars. They’re internet-connected devices that use artificial intelligence, advanced sensors and other cool tech to do amazing things. Even in South Africa, where the shift to electric vehicles is unfolding slowly, we are seeing more and more cars come to market with connected features.
These features include advanced driver-assistance systems (ADAS) and infotainment offerings — for example, emergency call systems, diagnostics data, and using a smartphone app to lock, unlock, or locate your car. This represents a dramatic leap in features and functionality over the telematics boxes some insurers use to analyse your driving behaviour and adjust your insurance premiums if you brake too hard or drive too fast.
A connected car could generate richer data that insurers could use to tailor premiums and policies in real-time based on where, how well and how far you drive. Related to connected cars is the slow move towards self-driving (or autonomous) cars. While truly autonomous cars are some way off in South Africa, we can expect to see wider adoption of semi-autonomous cars that can accelerate, decelerate and stop without human intervention
Examples of these ADAS features include self-parking, adaptive cruise control and collision avoidance systems. In the longer term, these features could help to bring insurance claims and premiums down by reducing human error on the roads.
4. Digital insurance set to go mainstream
While insurance had previously lagged behind many other industries in giving consumers access to convenient digital processes, the last year or two has seen mass adoption of pure online insurance offerings internationally. South Africa has been no exception.
With digital insurance providers using automation and self-service to drive down overheads and operate efficiently, the result is a significant cost saving being reflected in sustainably lower premiums
As more customers move online to purchase, claim from and manage their cover, we can expect continued innovation to lead the charge on lowering premiums. Perhaps even more exciting than the cost savings, is the way that digital insurance puts you in control and removes the hassle from insuring your car.
Ernest North is co-founder at digital insurance platform Naked.