Are disruptive technologies like autonomous vehicles and ride-sharing bringing to an end auto insurance as a major business avenue for insurers? It’s a question that many would argue is premature. Yes, Uber has enjoyed success, but autonomous vehicles face issues. However, the idea of a decreasing auto insurance business is something most insurers now face.
Property insurance lines are catching up to auto insurance with many predicting the trend will continue and property will overtake auto in the coming years.
Auto premiums ratio compared to property was 61% to 39% ten years ago, according to data published by the Office of the Superintendent of Financial Institutions (OSFI). In 2007, insurance providers wrote $14.3 billion in auto new premiums, while property had $9.2 billion in net premiums.
By 2017, the number had changed. Auto accounted to $17.4 billion in net premiums written, while property accounted for $15.4 billion. As the data shows, auto is not necessarily shrinking, but property is growing. However, it is widely expected auto will eventually decline as disruptive technologies take hold.
“It’s not so much that auto is shrinking (yet), but property is growing much faster as a line of business,” MSA Research president and CEO Joel Baker told Canadian Underwriter.
“As you know, more people in urban centres are forgoing getting a car and opting for transit or Uber/Lyft,” Baker added. “Some downtown condos don’t offer parking spots etc. Longer term autonomous vehicles will diminish the auto line further. I think it is safe to say that the sun is beginning to set on auto as the dominant line of business.”