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What are the components of the connected car ecosystem and what are some examples of insurers leading in this area through partnering?
Hello! Thanks for your question about the components of the connected car ecosystem and the role of insurance companies in this ecosystem, specifically focused on the Asia-Pacific region. Based on your feedback from the previous response you received, I've provided some details below to supplement the information that my colleague provided. To summarize the main points:
1. The connected car ecosystem consists of consumer services, connected car packages, and supply-side technology.
2. Insurance companies are creating value through a number of benefits to the consumers, in addition to personalized rates, as well as benefits for society at large.
3. The APAC market for connected cars is worth $5.7 billion, with an expected CAGR of 47.7% for the next few years.
You'll find a deep dive of my research below.
METHODOLOGY
To respond to your request, I began by looking into the connected car ecosystem to understand the various components. Next, I researched industry reports and articles on how insurance companies fit into these ecosystems, what value they're creating, and the partnerships they're involved in. Finally, I looked into market research on the Asia-Pacific region to understand the maturity of the market.
ECOSYSTEM
There's an excellent map of the connected car ecosystem on this source from PWC. I'll summarize here:
1. Consumer Services
These include smart mobility services such as car sharing, ride sharing, rental, robo-taxi service, and travel. In addition, it includes in-car services such as advertising, communication, social media, commerce and payment, media content, and services such as health and education. Key players in this are include internet and tech companies and specialized service firms.
2. Connected Car Packages
Bundles of functions which offer advanced features to improve or help manage the car’s operation. For example, an autonomous driving package that would gradually transition a car to automatic driving. Automotive OEMs play a big role here.
3. Supply-side Technologies
This includes advanced driver assistance systems, human-machine interface, infotainment, connectivity, computing, and cloud-based enabling services. Overall, "underlying systems that connect the car to the wider world and support the provision of the other two groups." This sector was traditionally controlled by auto suppliers, but technology companies and auto makers are moving into the space.
McKinsey summarizes it like this: "a strong ecosystem is forming around the connected car, involving a range of participants—among them automakers, insurance companies, telecommunications firms, sensor and chip manufacturers, and digital-platform giants like Amazon and Uber, as well as academic institutions and standards-making bodies."
VALUE CREATION
New technologies are on the path to make traditional insurance obsolete, according to an Accenture report, so value creation is key for insurance companies to remain competitive and necessary. Insurance companies are doing this by using new technology to create value for customers as well as external value for their partners and for society at large. According to the Accenture report, "Becoming a digital insurer is no longer simply about incorporating digital technologies into an organization. It’s about using them to create a broader fabric that connects customers, partners, employees, and industries, and enables new insurance value propositions that expand value creation and growth."
In addition to what my colleague discussed about personalized rates based on safe driving data, insurance companies are able to offer several other benefits for customers. The same analytics that are used to reduce rates can be used to streamline and automate the claims process in the case of an accident, which saves the driver time and money while also saving the insurance company money. As this report puts it, "connected vehicle services allow insurers to keep customers apprised of claim status, close claims faster and gain feedback, ultimately leading to increased customer satisfaction." In the event of an emergency, a connected vehicle also makes it easier for insurance companies and other service providers to assist the customer. For example, by providing timely roadside assistance, navigation services, and enabling hands-free calling and texting. Analytics of the customer's driving can also help the customer with safe driving by offering personalized learning tools and improvement suggestions.
Beyond the individual customer, the services provided through connected car insurance also have social and environmental benefits. By tracking drivers, these services can help reduce road congestion and traffic accidents. Moreover, they can improve fuel efficiency and vehicle maintenance, reducing the environmental impact of driving.
Finally, the partners of insurance companies can benefit from these new technologies. Car companies can benefit from using the data collected by insurance companies to improve their products. Companies throughout the insurance telematics supply chain can benefit from the integration of smartphones with the connected car system. In-vehicle connectivity is expected to add $600 billion in value to the connected life industry and $245 billion in revenues from connected devices and services such as personalized auto insurance.
APAC MARKET
According to Statista, the connected car market in the Asia-Pacific region is expected to be worth $5.7 billion this year. That's a 12% share of the global $47 billion market. For comparison, the US market is worth $8.2 billion. There is very fast growth projected for the APAC region, due at least in part to the high penetration of technology in the region. Over 42% of the world's internet users are in Asia, including hundreds of millions of 4G users. According to Statista, the APAC market is expected to grow at a CAGR of 47.7% through 2021, resulting in a market size of $27 billion in 2021. Connected car penetration in the Asia-Pacific region is currently 2.8%, with 2.5 million connected cars in the market, and that's expected to grow to a 13.7% penetration rate in 2021, with over 50 million cars in the market.
CONCLUSION
To wrap up, I've provided insights into the connected car ecosystems, the role insurance companies are playing and how that adds value, and the maturity of the connected car market in the Asia-Pacific region. I hope this information is helpful to you! Thanks for using Wonder, and let us know if we can help you with anything else.