Hot Features
Premium
Trade smarter, not harder: Unleash your inner pro with our toolkit and live discussions.
While shifting technology is expected to disrupt insurance markets, insurtech is widely predicted to be the biggest threat to traditional insurers and brokers. However, many are overlooking the potential impact of massive tech companies, who may increasingly see insurance as a fresh avenue.
Technology is often the big disrupter across industries. Most will remember how tech has driven a major change in the casino realm, bringing customers to online casinos to enjoy their favorite games. While maybe not as transformative, the emergence of big tech companies as potential insurers could have a profound effect on the insurance market.
Why would big tech look to insurance? Well, autonomous vehicles are on the horizon and promise to change the way in which we look at personal transportation. While self-driving vehicles are fairly nascent at the moment, within two decades fully autonomous cars will likely be common.
Auto insurance works on the assumption of liability. In other words, insurance companies hold drivers liable should an accident and damage happen, after-all, it is the human who is operating the vehicle. When autonomous vehicles eventually remove humans from the equation, insurance companies will no longer be able to hold drivers liable.
Instead, they will turn their attention to the tech companies that develop the autonomous vehicle. In other words, the car company will be on the hook for insurance claims not the driver. While the idea of no more auto insurance is a dream come true for individuals, for tech companies and insurers it is an undesirable outcome.
Tech companies do not want to be liable to pay insurance claims or to pay premiums for cover to insurance companies. In response, they may try to cut the insurer out altogether by creating their own insurance products. For the insurance industry, this is a disastrous prospect that would leave the auto insurance market in tatters.
Certainly, once the tech giants turn their considerable marketing efforts towards selling insurance customers are likely to be further swayed. Insurance companies will face massive competition from companies with more resources than them. Interestingly, tech companies will not be reliant on insurance success, so will have a free swing at the market.
It is clear major multinational tech companies are making strides into insurance, especially those with a vested interest in autonomous vehicles. Google, Uber, and Tesla are already making serous noise about developing their own insurance products.
Tech companies also have another positive on their side. Specifically, consumers are traditionally wary of insurance company and often lament the level of service from the industry. While concerns exist around big tech, notably regarding privacy, consumers have become accustomed to stellar service and uptime from major tech giants.
The message for the auto insurance industry is clear… change big and change fast to avoid being left behind. A threat from big tech may seem an unrealistic possibility to the most positive insurance watchers, but to those who understand the ongoing development of autonomous vehicles, the threat is very real.
