How can insurers deal with the current challenges in the motor insurance business and what should they expect from the future, the new capabilities brought by technology and the changing mobility options? Some answers will come today in Vienna, at the Motor Insurance Conference organized by XPRIMM. BAAR is the conference's Official Partner, while RECREX and HELLAS Direct are supporting the conference as partners.

Read the main statements:

Sandra SCHWARZ, President, Council of Bureaux, Head of the German Green Card Bureau, Germany

• The war in Ukraine and the large number of refugees that left Ukraine towards European countries because of it require adaptive measures from the Green Card insurers' side
• However, there are some issues that, although have solutions accepted in practice, still need a legal largely accepted solution; many countries are behind the system in this regard
• Frontier insurance system, although works and serves the situation, is still not enough linked to rest of the Green Card system and this leads to situations when the Guarantee Funds need to pay claims just because they can check the existence of a frontier policy
• The sanctions against Russia and Belarus are creating additional problems, with claims' payments as well as in the CoB's inner cooperation - while Russian and Belarusian bureau are still members of the system, they can not take part in the CoB's general assemblies
• As of June, Green Card insurance policies issued in Russia and Belarus will not be valid anymore, regardless the date of their issuance; it is still unclear what happens in the case of multiannual Green Card policies which lose validity - it will be decided at domestic level the way insureds should be reimbursed to remaining period of validity after June
• While the Russian and Belarusian bureaus are not under sanctions themselves, they have members who are sanctioned and are in relation with their governments and this means that some categories of assistance and services cannot in fact be deliver
• There are significant differences between the insolvency funds' operations in different countries and this creating additional challenges and also EU's view on how and when should the insolvency bodies intervene is different from the current legislations; it is instrumental that all the rules should be aligned
• The differences in the level of digitalization have to be overcome to allow a smooth functioning of the system.

Alin ENESCU, Director Special Projects Department, Project Manager, BAAR 
Mihai NECRELESCU, Risk Manager, BAAR

• BAAR (the Romanian Motor Insurance Bureau) offers a wide range of applications to its members, as well as partners, to facilitate their operations. In addition to these external offerings, BAAR has also developed a suite of internal applications designed to support its own activities: AIDA – MTPL policies administration, Cont Client – mobile application for self-issuing  of Claims History Statement,  a public web application for submitting requests for high risk insured classification, mobile application for filling the European statement for accidents etc.
• Amiabila is a digital tool that allows filling online the amicable accident report for the road incidents involving no more than 2 cars and only material damages; launched in 2022, the app has already new capabilities and is planned to soon allow loss notification, QR code policy reading etc.
• AIDA Cont Client - Statement relating to the third-party liability claims - designed to facilitate the self-issuing of claims history reports

Mehmet Akif EROĞLU, Chairman, Insurance and Pension Regulation and Supervision Authority, Türkiye

• Motor insurance accounts for about 50% of the insurance premiums written in the Turkish market; put of this total more than half belongs to the mandatory MTPL branch
• Agents are the main distribution channel, accounting for about 80% of the premiums
• The Turkish market is a difficult one and MTPL insurance is quite challenging, but the market authority has a plan in place to improve processes and conditions on the market
• At the end of 2022, the technical result of the market was of ~#00 million euro, but the market lost money on the MTPL line; loss ratio on the MTPL line is very bad and that means the line is practically supported by the other business lines, provided they are not rcording losses themselves
• Main reasons of loss – the cap on tariffs, costs of mediation etc.
• The plan created by the market authority concerns reducing road accidents frequency, removing in a middle-term perspective the tariff cap, improving regulation etc. Linking the MTPL policies not only to the vehicles, but also to drivers is meant to encourage responsible behaviour on roads and thus, reducing claims frequency

Matteo CARBONE, Founder and Director, IoT Insurance Observatory, Italy

• Telematics has already been recognized as a necessary capability in the US personal auto insurance market; European markets have still not leveraged the mobile-based telematics opportunity adequately;
• More and more customers in Europe would recommend the use of an app monitoring driving behavior and rewarding its user for safe driving, give you feedback and tips to improve, support you in case of an emergency/a crash and provide other services
• There is significant space for pricing innovation and differentiation: UBI pricing is strongly preferred while surcharge (linked to higher potential value sharing) is not a relevant barrier to the adoption; younger generations seem to prefer a dynamic pricing system
• Frequent and tangible rewards offered to customers provide the best results
• The telematics portfolio has a higher retention - A large part of your policyholders are loyal and unlikely to be addressed with a swich&  save telematics approach; providing a telematics-based app (without need to switch the existing policy) to the existing book of business can generate the most relevant impact on your portfolio
• Three out of four policyholders declared that they would pay at least EUR 5 a month for the telematics services provided by tech companies
• Adding 5 eur per month of services would mean doubling (or even more, in some countries) the current underwriting profits of an insurer’s auto policy
• Mobile-based telematics is good and cheap enough to be used in any market
• Doesn’t exist a market not ready for auto insurance telematics, only telematics programs not good enough to overcome policyholders’ inertia

Orsolya HEGEDUS, Lead Automotive Sales & Delivery, Swiss Re, Switzerland

• 1/3rd of new cars are sold with ADAS – by 2030 half of the car park will have ADAS features; ADAS is a product with a complex architecture and heterogenous functions
• Swiss Re ADAS Risk Score is translating technology into actuarial science; ADAS has a real impact on safety and its effects need to be reflected in risk models
• In general, insurance base models either underestimate or overestimate the vehicles capability to prevent accidents
• Electrification of cars is reflected in the product roadmap of most OEMs and, as such EVs will form a larger share of the portfolio mix this decade
• Global EV sales doubled in the last year to a new record of 6.6 million and by 2030 more than 30% of cars will be electric
• Standard rating models built for ICE cars are falling short to describe EV risk which means that risk assessment tailored to ICE does not adequately reflect EV risk landscape; Swiss Re’s EV Risk Score shows large spread of adjustment factors over ICE by vehicle brand
• According to Swiss Re the future of motor insurance scoring is dynamic, modular, vehicle-centric

Eran TIRER, Founder & CEO, Ledgertech AG

• Recent motor insurance trends re affected by enhanced mobility
• Insurers are adding new focus areas in digital motor insurance – EV charging, embedded insurance, micro insurance, personal mobility insurance etc.
• The new world of mobility is more than about driving and, for sure, more than driving in my own car – there is needed a lot of flexibility to adapt to these changes
• Traditional insurers are not geared to the digital era – many tend to consider selling insurance online drives them in the digital era, which by far innacurate

Arndt GOSSMANN, Chief Executive Officer, DGTAL │ THE INSURANCE FACTORY 

• Some regulators are forbidding AI  - this is about large language models which translate words, terms or entire paragraphs into mathematical vectors and so the similarities between different paragraphs become obvious; ChatGPT puts together such similar vectors and combines them – but that doesn’t mean it writes text. For the time being the models are able to recognize different meanings of the same word depending on context. However, it is missing a real understanding of text.
• DGTAL has developed software that is translating unstructured document into a structured form that can be analyzed; it trained GPT 3 modules for insurance terms.
• AI is like a little child – it masters language, but context, or at least not completely
• DGTAL platform takes documents and analyzes them in a series of several steps. It all starts with the document itself – the electronic form of the document is transformed into a machine readable and identifies the main topics in the content. Based on topics analyzed, each document gets a severity score (how relevant it is) and it ranks it among the related documents.
• Current technology is able to summarize the content of the document – as such, before the first human gets in contact with the document, there is available information on the content, relevance, possible following actions to take
• The AI technology allows searches in huge portfolios of information, after any type of criteria – for example, in a claims portfolio it may identify all claims with similar characteristics and the interrogation may be made in simple, plain language – very user friendly.

Frederic BRUNETEAU, Managing Director, Ptolemus Consulting Group 

• With 900 million connected vehicles in use by 2030, we expect their growth to be 10 times faster than the vehicle parc
• Connected vehicles can transmit data from a fast-growing number of sensors and receive data from the cloud;
• Typical new cars can have 60-100 sensors embedded, from the oil level sensor to the airbag accelerometer;
• The OEM system(s) in the connected car is the one that can generate the largest number of data points
• An OEM should have a connected insurance strategy to reduce TCO, exploit synergies with repair, leverage the value of data for innovation, enable new models of ownership & mobility etc.
• Because of the data protection laws, to access the data, the insurer needs to obtain driver consent (for personal data)
• Personal data collectors must think about why they are collecting personal data and collect the minimal dataset needed; also, they need to be transparent about what data is being collected and for what purpose
• We expect over EUR 40 billion in insurance revenues generated from connected car data hubs in 2030. However, currently the most connected auto insurance programs are in the US, while in Europe access to connected cars data is rather challenging; still, there are already 22 connected insurance programs in Europe
• Connected vehicle insurance will move from an option to the standard of auto insurance

Menekşe UÇAROĞLU, CEO, IUC Group, Türkiye  

• After 2001 crises there were lots of major structural reforms in Turkey, and from 2004  until 2017 inflation was under control at 8-9%. After that, inflation increased spectacularly, reaching 83.%% in September 2022, exceeding by far the budgeted inflation estimation of appr. 21%
• Impact of ınflatıon on motor prıcıng and technıcal results is very strong: Market Combined Operating Ratio for  Motor Casco increased by 19.2pts in Q2 2022 vs FY 2021 to 135.8%
• Average Casco Premium of the market has increased 2.5 times only in 12 months between mid-year 2021 and 2022 due to the effects of FX and inflation
• It is very important for Turkish insurers to have fundamental strengths for early detection of deterioration in cost drivers.
• Determination of loss cost,  the amount of money an insurer must pay to cover claims, including the costs to administer and investigate such claims, was a major target in this ever-changing and increasing cost atmosphere
• Market needed to rely on the information coming from «Insurance Information & Monitoring Center» for their iinstant monitoring capabilities on cost drivers to make data driven decisions.
• Companies applied Instant and segmented tariff management and dynamique execution
• Continuous improvement in claims initiatives to create competitive advantage, i.e. increased focus on mobile repair
• Companies with large motor portfolio have special teams which are analyzing results monthly, get insights from claims and technical teams to make accurate estimations for the pure premium in all detailed lines
• Thanks to the Insurance Informatıon & Monıtorıng Center, in Turkey there is high quality market data for production in motor lines and it is crucial to get benefit from this data by the required technical capabilities.
• Instant and Segmented Tariff Management: claims types are modeled separately because inflation does not affect them all the same: Crash Collusion; Glass; Total Loss. Models are update frequently, which is crucial because declared inflation and claims inflation are not always parallel.

Matteo CARBONE, Founder and Director, IoT Insurance Observatory, Italy

• Autonomous driving level 5 means the driver is a simple passenger in the car, but that moment is not yet close; what we have now is rather assisted driving, so the issues of liability stay still with the driver

Arndt GOSSMANN, Chief Executive Officer, DGTAL

• GDPR remains a big issue related to data collection and legislation will have to take into consideration also the benefits of the use of data

Luka PRELEVIC, Head of International Growth, Hellas Direct

• Today, the severity of damage on EV is high, but the frequency is still not, but things are changing fast. In the future, maybe not very far, the situation will change and EVs’ batteries will be less expensive or less risky
• Using aftermarket spare parts makes sense, especially when the damaged car is old, but total transparency is required so that the client can choose.
• I expect in the future we will see an increased importance for the added services – as the MTPL policy cannot change in a major way, adding value by providing supplementary services will be a dominant trend.

Christoph KONASZ, Professional Insurance Non-Life Retail, VIG Versicherungstechnik Retail

• We don’t have enough data on EV claims, but we need to prepare and collect information because very soon it will no longer possible, managing EV claims in a traditional way;
• The reason behind price differentiation following several criteria – so eliminating some sorts of data because they might raise suspicion of discrimination does not make sense in the insurance context.

Maria ALTHUBER-GRIESMAYR, Head of Motor Insurance Department, VVO

• EVs raise a lot of challenges when it comes to loss management – electric batteries that operate the EVs are modifying the risk profile in motor insurance because they bring specific risks and high costs.