By Andrew Brown-Allan ( Article featured in Insurance Business)
To nobody’s surprise, new car sales in the UK fell by 44% in March compared to the same month last year. Although the manufacturers put a brave face on the numbers, noting that new car registrations for the 2020 registration plate helped them stay at the top of the cliff, rather than driving straight off it, a bleak April is surely inevitable as the UK economy grinds to a halt.
COVID-19 is the second part of a double whammy for vehicle manufacturers, following Brexit, so there is a big question mark hanging over the future of the industry. The next couple of months will be a huge test of its resilience.
Nevertheless, despite some apocalyptic speculation about the UK’s future, post COVID-19, I doubt we will go back to the horse and cart. As and when new and used vehicle sales slowly pick up again, vehicle manufacturers (OEMs) will need to shore up their battered balance sheets by wringing maximum value from every unit sold. Including insurance.
In addition to the obvious opportunities, such as gap insurance and paint protection, could now be the time for manufacturers to get serious about selling motor insurance to their customer? And, if they do, what kind of products should they sell?
Maybe new types of insurance? After all, the traditional 12-month renewable comprehensive policy feels so last year, especially to millions of locked-down people looking at their fully insured car sitting on their driveways going nowhere.
Vehicles increasingly resemble computers on wheels; they spew out masses of data. As mobility stands at a COVID-19 induced crossroads, vehicle manufacturers now have the chance to leverage their own connected car data to offer customers highly customised/personalised insurance that fits the customer’s intended use. Pay as you go insurance, multi-use policies, or miles-based programmes will suit reduced and/or changing vehicle use post-COVID-19.
I can see insurance capacity providers combining with ‘on board’ telematics technology suppliers to deliver mass market telematics as a means to satisfy emerging demand for new mobility. Specialist technology players can supply scoring, product design and telematics technology as well as – through partnerships with insurers – capacity and administration.
The prospect of a new triangulated partnership between the vehicle manufacturer, capacity provider and specialist administrator is an exciting one, and may be with us far sooner than anyone thought, not least because, hopefully very soon, those vehicle manufacturers need to find new ways of making more money after their vehicles roll off the factory production line.
Andrew Brown-Allan is the Group CMO for IMS and Trak Global Group. He can be reached for further information or comment via email at email@example.com.