As the Internet of Things (IoT) evolves into the Internet of Everything (IoE) there will be a trickle-down effect that impacts a variety of related industries and market sectors.
According to the latest market study by ABI Research, global insurance telematics subscriptions are expected to grow at a CAGR of 81 percent from 5.5 million at the end of 2013 to 107 million in 2018.
"With Progressive’s Snapshot having attracted more than 1 million drivers in the U.S. and Octo Telematics already counting close to 1.3 million UBI customers -- mainly in Italy -- insurance telematics is now entering the mainstream market, at least in certain countries," said Dominique Bonte, VP and practice director at ABI Research.
The emergence of smartphone-based solutions, the gender ruling in the EU, and growing awareness of insurers to move to a more proactive safety, preventive, and service/CRM based approach improving the customer experience and loyalty will be strong drivers for growth in the near-to mid-term.
However, in the longer term, with the emergence of active safety systems based on ADAS and V2X technology and various forms of semi and fully autonomous driving and the drive towards a zero accident risk environment, the auto insurance industry will face new paradigms which will fundamentally change the nature of their business.
The whole concern about accurately monitoring the driver behavior and calculating the risk of the human driver getting involved in an accident disappears when contemplating insurance for cars without a driver.
While traditional auto insurance revenues will ultimately unavoidably decrease, insurers’ expertise in automotive analytics and statistics will offer new opportunities in a burgeoning Internet of Things in which big data skills will be one of the most sought-after capabilities.
It's yet another example of how rapidly evolving technology will dramatically transform a traditional industry worth hundreds of billions of dollars.
ABI's market study highlights trends, drivers, and inhibitors of insurance telematics solutions as well as the changing nature of UBI with accident prevention and CRM becoming more important. Forecasts are provided for insurance telematics installed base, shipments, and discounts per region and implementation type.