- Car insurance is getting a makeover – no more one-size-fits-all! Usage-based insurance lets you pay based on how, when, and where you drive, like paying for a gym membership only when you actually go.
- Tech is the new driving buddy – Insurtech is revolutionizing the scene with AI and apps that make getting insured as easy as swiping right on your favourite dating app.
- Say hello to tailored coverage – Future policies will be as unique as your Spotify playlist, offering personalized plans that fit your lifestyle, from road trips to city commutes.Ready to dive into the future of insurance? Buckle up – it’s going to be a smooth ride!
Gone are the days when consumers were satisfied with receiving the bare minimum; these days, it's all about getting more bang for your buck. Clients are demanding more, and the insurance industry has taken notice.
Upgrades in the insurance process have already been in place, i.e. benefits are extending beyond the protection of your assets, and more innovative changes are soon to follow.
Read on to discover the future of car insurance in South Africa and how you may benefit as a motorist with an active policy.
How Is Car Insurance in South Africa Changing?
The world underwent a massive reset due to the global crisis known as Covid-19; we all had to stay home.
Many countries implemented a curfew, which forced physical interactions to take place on video conferencing platforms such as 'Google Meet' and 'Microsoft Teams'.
Insurance companies followed suit by introducing online solutions to meet their client's needs and better serve their customer base.
And this solution came in the form of Digital, Usage-based, and Predictive Insurance.
These different types of car insurance and tools were not created during the global pandemic; their use was further popularised and emphasised at this time.
Digital
What is Digital Insurance?
Insurtech 101 with John Bean | 11:FS Explores
Although "Digital insurance" is a loose term, an applicable definition is using a technology-first engagement model to sell and manage insurance policies.
Digital car insurance or insurtech companies have broken the mould by doing away with traditional car insurance practices.
Instead, they have chosen to simplify the insurance process, offering tech-based solutions to suit the modern era.
So if a person is unavailable for lengthy sales calls, they can opt to go online.
Getting a quote, buying a policy, and lodging a claim are all possible long after the business has closed for the day. These services are available online or on the car insurance company's relevant app.
Thanks to your Smartphone, the future of your car's insurance is in your hands.
With the tap of a few buttons, a chat support function can quickly resolve any question surrounding your car's protection.
The upside:
- Quick and convenient.
- Entirely online; no phone calls or face-to-face interactions (a win for introverts everywhere!).
- Transparent pricing and services.
South Africa often finds itself falling behind on a few trends, but two digital insurance companies currently operating and disrupting the market, are:
Pineapple
Pineapple promises to "[seed] the future of insurance" by offering innovative tech-based solutions to South Africa's insurance issues.
Their use of a smartphone camera and some clever AI make the process of buying and claiming on a policy a more social and transparent experience.
The AI technology allows South African users to insure anything they can snap a picture of, with the entire purchasing process automated through an app or online on the website.
This method allows users to snap a picture of anything they wish to cover, and a quote is guaranteed in 2 minutes or under.
Naked
Naked Insurance offers a "new way to insure your stuff" with their app, which allows users to purchase insurance at lower rates than those offered by established companies in the industry.
Naked claims to offer lower premiums, thanks to its use of an AI chatbot and computer vision technology.
They've also simplified the insurance process; take a photograph of the vehicle and get a quote in 90 seconds – with the cover kicking in minutes after it's accepted.
The downside:
- Loss of human interaction (cue sound of extroverts crying).
- Limited coverage options; some insurers only offer comprehensive coverage.
- Usually offered by start-up companies; doubt due to unfamiliarity of company.
A digital car insurance company has a further reach than traditional insurers; they can provide insurance coverage to clients nationwide, even when they may not have an office in that area.
Having the services online makes them widely accessible and allows you, the policyholder, to quickly benefit from the functionality offered by a digital insurance company.
Usage-based
What is Usage-based Car Insurance?
Learn More About Usage-based Insurance
Usage-based Insurance, or UBI, is a type of car insurance offered by some insurers that tracks your driving by calculating your mileage, often resulting in reduced car insurance premiums — provided that your driving meets the requirements stipulated by the insurer.
Policyholders are required to install a device in their vehicle, typically a telematics device, that monitors their mileage. Their premium is then calculated based on the data collected.
This type of car insurance can benefit people who use their vehicles less frequently, as they may pay less than those who drive more often.
The upside:
- Lower premiums for low-mileage drivers.
- The incentive to drive less.
- More accurate pricing.
Although UBI is still in its infancy in South Africa, it is being adopted, and some car insurance companies have launched programmes in different parts of the country.
Examples of car insurance companies that offer usage-based car insurance are:
Pineapple
Pineapple again offers policyholders a chance to save money by decreasing their monthly premiums and saving on their insurance fees with the usage-based Drive Less, Get Blessed benefit.
This UBI option rewards members with an automatic monthly discount if they drive below 300km.
The value is approximately 30% of your monthly premium but is unique per policy.
Old Mutual
Old Mutual offers its clients a similar opportunity to save on their insurance premiums by presenting them with a usage-based car insurance option.
Motivated by the same need to save their clients money as Pineapple, introducing UBI is the best strategy to support customers during these tough economic times.
Old Mutual promises that policyholders can pay 30% less on their car insurance using their UBI chatbot (*T&Cs apply).
The downside:
- Privacy concerns.
- Limited availability.
- Cost of the telematics device installation.
The future of car insurance is rapidly becoming digitised, and usage-based insurance is expected to grow popular as it is a more personalised way to reduce the cost of premiums for low-mileage drivers.
Predictive
What is Predictive Car Insurance?
Predictive analysis in the insurance space uses data and analytics to predict potential risks and tailor insurance products and pricing to individual customers.
The tool uses machine learning techniques and statistical algorithms to predict the outcome of different events based on collected data and historical records.
In the past, insurers had limited resources and reference points, making policy pricing intuitive.
Thanks to modern-day predictive analytics tools such as social media, sensor data from connected devices (e.g. telematics devices), customer interactions and historical claims, data is used to analyse several data points.
The upside:
- Better risk management.
- More accurate pricing.
- Personalised products.
Two examples of the use of Predictive analysis in the car insurance industry:
Pineapple
Predictive analysis helps fill in gaps by providing an in-depth look at a client's risk profile, determining their monthly premium.
Pineapple uses this method which allows the insurer to assess the risk levels of different policies, which helps establish the price of insurance premiums.
With underwriting in particular, the predictive analysis allows car insurance companies to customise policy plans to tailor to each customer and case.
Hollard
Another insurer that has taken the initiative to introduce tech-based solutions to their car insurance queries is Hollard.
The company uses AI-driven chatbots backed by a machine learning model to answer broker enquiries and learn from each interaction so they can resolve even more queries in the future.
The downside:
- Data privacy concerns.
- Potential for bias; different rates based on the data could be seen as unfair to some groups.
It's crucial to note that these and other companies may have different approaches and ways to use predictive analysis in their business.
Generally speaking, many insurance companies worldwide are exploring using predictive analytics to improve underwriting and pricing.
The key to the future of car insurance lies in the successful implementation of the data collected.
Chatbots, for example, help improve customer service and process claims, all while decreasing the workflow in business operations and reducing costs.
A FINAL WORD
The future of car insurance has never been more exciting. The shift towards digital, usage-based, and predictive insurance models will benefit insurers and policyholders significantly.
As the world further adapts to a technologically driven way of life, so does car insurance.
New opportunities for innovation, improved customer experience, and changes will allow for more personalised and accurate pricing, better risk management, and an overall more efficient and convenient process for purchasing and managing your policy.
As the industry continues to evolve, it's clear that the future of car insurance is one of growth, progress, and adaptation to meet the changing needs of consumers.
Wow, you've actually read this far? Colour us impressed! Now, do something unpredictable – get a quote! Trust us, it's the least regrettable decision you'll make today. Go on, surprise yourself (and us)!
Pineapple (FSP 48650) is underwritten by Old Mutual Alternative Risk Transfer Insure Limited, a licensed Non-Life Insurer and authorised FSP. T&Cs apply. Premium is risk profile dependent.
Please Note: The information provided above is for informational purposes only; you should not construe any such information as legal or financial advice.
Team Pineapple
Team Pineapple comprises our company’s top talents, who are dedicated to creating clear, high-quality content on essential vehicle insurance topics. This diverse group, including actuaries, accountants, data scientists, and insurance professionals across South Africa, collaborates to produce enlightening and empowering articles.
Each piece is thoroughly researched, factually accurate, and rigorously reviewed to ensure quality.
*We say they’re the finest because we want them to keep writing for us!
