Feature: tech companies could use technology to disrupt auto insurance market

Published: March 15, 2017

Updated: July 24, 2018

Author: Luke Jones



The impact of autonomous technology on the auto insurance industry is one of the hot topics amongst governments and insurance companies. Discussions typically centre around how insurers will lose revenue as vehicles make roads safer and premiums will be reduced. However, proposed manufacturer liability could present the biggest threat to the auto insurance sector.

It is widely presumed that manufacturers will assume liability for their autonomous vehicles. Full self-driving vehicles that require no steering wheel are predicted in the next 10 to 15 years. If the “driver” has no control they are essentially a passenger. Vehicle owners will not take liability in the event of a collision.

Instead liability will pass to the companies who make the vehicles. However, the autonomous market will be like no other vehicle sector. As well as traditional carmakers, the market will also be filled with tech companies making their own vehicles.

One important question to ask is why tech and car companies need insurance providers when they could simply create their own insurance products? This paints an interesting scenario long term, where auto insurance may become a thing of the past in a traditional sense.

However, even now companies could muscle in on the auto insurance market and use telematics and usage-based insurance (UBI) products.

In a recent report, Morgan Stanley and Boston Consulting Group says companies like Apple, Amazon, Verizon, and Tesla are well placed to start selling their own insurance products. It is worth mentioning that of these companies, only Tesla has deeply explored autonomous tech. indeed, Apple has yet to announce any plans centred on self-driving vehicles.

Nevertheless, the firm suggests these companies (and others like them) could leverage new technology to enter the auto insurance market:

“Car safety technology and shared mobility could bring non-traditional players to the $400 billion global auto insurance market,” the report was quoted as saying. 

“We think it is possible to envisage a credible entry strategy for tech giants that leverages driver data collected by navigation apps such as Google Maps, Waze, or Apple Maps services. This would allow a tech giant to push competitive, tailored insurance offers to its customers,” the report added. 

Interestingly, Morgan Stanley says that these insurance newcomers could carve off at least 20% of the market, but it is easy to see how that could grow as autonomous technology increases in popularity.

There is a certain irony here. UBI and telematics have also been cited as potential saviours of the auto insurance industry. They both represent a way for companies to use technology to bring new products to customers and grow business.

However, the potential of UBI could also lead to the auto insurance market becoming a free-for-all in the age of autonomy.