Future Challenges for the Ontario Car Insurance Industry
September 20, 2016 (PRLEAP.COM) Business NewsSeptember 20, 2016 - Ontario, along with the rest of the country, faces some big changes in the way cars and drivers use roads and vehicles. Automakers continue to develop increasingly autonomous vehicles, changing the way motorists drive. The Millennial Generation — now a larger demographic than Baby Boomers — put off on obtaining driver's licenses. They've embraced ridesharing and carsharing with enthusiasm. Demand for hybrid and electric vehicles continues to grow.
These changes impact new car sales, potentially softening the market. The auto insurance industry faces radical change as well. Without a strong look at added value, revenue decline may hit insurers soon.
The Impact of Millennials - The demographic group between 18 and 34 has a different perception of automobiles and car ownership. As alternatives for mobility, fueled by technology, emerge, the tech savvy millennials will be at the forefront of the experience. This is clearly demonstrated through the success of ridesharing pioneers, such as Uber. In July 2016, 20 million users made over 60 million trips through the service's 600,000 drivers. As mainstream acceptance for ridesharing grows, watch for these numbers to increase.
This already prompted insurers such as Aviva to design insurance endorsements with ridesharing drivers in mind. Though primarily seen as an alternative to conventional cab service, many millennials see ridesharing as an alternative to car ownership. This may undermine new car sales and along with that, new car insurance policies.
Insurance and Autonomous Vehicles - Rear view cameras, lane warning indicators, smart cruise control and other driver assistance features do make driving safer, but it's not yet known if these assists will make drivers more complacent, relying increasingly on the tech features of their vehicle. This is a grey area for Ontario's auto insurers. Usually, the first to welcome safety features in vehicles, it's not clear if the emerging technology will save or cost insurers in the long run.
Volvo is publicly on record accepting blanket liability for any of its vehicle's autonomous driving features failing and causing an accident. While that may reassure drivers, a potential complication is handoff liability. There's not a definition yet of when an autonomous system ends its function and a driver takes over. Accidents happening at the handoff phase may slide into an uncomfortable space legally until precedents are set. This uncertainty won't sit well with the insurance industry.
Future Auto Insurance Prices in Ontario - Auto insurance industry analysts see these changes as likely to reduce insurance premiums in the future. While this is welcome news to car insurance consumers in Ontario — currently the most expensive province for car coverage — it means declining revenues for Ontario's insurers. While safer driving may mean declining settlement costs, the balance point remains clouded by how technology develops and how enthusiastically drivers adopt it.
Even the nature of auto insurance shopping changes in the Internet Age. It's simple for a motorist to obtain accurate car insurance quotes in Ontario in just a few minutes online. This permits comparison shopping between many more providers than in the past, since one point of contact searches more insurance companies than a single broker represents.
Changing technology and attitudes represent an uncertain future for the auto insurance industry. Those insurers who adapt will lead the way in a field where consolidation has been active in recent years. Look for mergers and acquisitions to continue, as major players diversify as a hedge against the changing market.