The Australian car insurance landscape is shifting gears, driven by technological innovation and always-evolving consumer needs, said Mozo, a company which operates a financial comparison platform.
Some of the major car insurance trends Mozo expects to see in 2024 are:
1. Usage-based and pay-as-you-go insurance
In 2024, Australia’s car insurance landscape is set to be driven by the uptake of usage-based insurance (UBI).
InsurTech motor insurance distributor KOBA’s success with its ‘pay as you drive’ (PAYD) model, which bases premiums on distance driven (clocked in real-time), reflects a growing consumer preference for flexible insurance options.
Simultaneously, ROLLiN which is part of Insurance Australia Group is testing the waters of the ‘pay how you drive’ (PHYD) approach with its Safe n’ Save product, which assesses driving behaviours such as speed and braking through an app on your smartphone. This product is currently only available to business customers but could be rolled out to a wider audience.
These developments, coupled with global trends towards more personalised and behaviour-based insurance models, suggest that 2024 could be the pivotal year where UBI gains widespread acceptance in Australia.
Mozo predicts that a ‘pay how you drive’ drive car insurance option will become available to the general public in 2024.
2. Electric and hybrid electric vehicles (EVs and HEVs)
The market share of EVs and HEVs in Australia soared to 8.4% in early 2023, a trend which is only expected to grow.
While typically cheaper to drive, EVs and HEVs often have unique risk profiles and higher repair costs than traditional vehicles, meaning insurers have to jump through hoops to accommodate them. This will eventually suck up too many resources and lead insurers to offer bespoke policies tailored to these vehicles.
And as this segment grows, it could eventually alter how insurance is structured and priced for all drivers. 2024 could be the year in which the first EV-specific insurance policies would be issued in Australia, said Mozo.
3. Technological advancements and AI integration
In 2024, advances in AI could lead to more efficient claims processing and the development of personalised insurance products based on driving data.
These enhancements will be part of a broader trend towards digitisation and tailored customer experiences. Chatbots developed by insurance companies will become useful in 2024, said Mozo.
Based in New York, Stephen Freeman is a Senior Editor at Trending Insurance News. Previously he has worked for Forbes and The Huffington Post. Steven is a graduate of Risk Management at the University of New York.