Around the world, cars typically stand unused almost 98% of the time. And yet so many of us take on a huge financial burden just to own one. We pay out a significant amount every year to cover things like tax, fuel and, of course, car insurance.
So, the idea that you could eliminate the cost of running a car is an attractive one. And it could be a reality in the next decade.
Personal vehicle sales are down. Fleet sales are up. Car-sharing, ride-hailing apps (like Uber and Lyft) and car club services (like Zip or Jaunt) are all increasingly common.
It follows that if people don’t own vehicles, the days of traditional motor insurance are numbered.
Let’s go back 120 or so years
Karl Benz of Germany patented the first car ever made in 1886. Cars first appeared on UK roads in the 1890s, bringing a new age of transport and a new kind of risk.
The earliest cars on the road had no protection from fire, flood, theft or accidents.
In 1896 General Accident, an Aviva heritage company, issued its first motor insurance policy. And, as sure as night follows day, the first motor claim wasn’t far behind.
Move on ten years and the Red Cross Indemnity Assurance Company were the first to offer insurance premiums based on the horsepower, age and type of vehicle.
As car use increased, customers’ expectations changed and motor insurance policies became more sophisticated.
In 1916, Commercial Union began offering cover for luggage, rugs and coats in cars.
By 1929, when pricing a motor policy, insurers were asking a driver’s age and how long they’d held a licence.
Motor insurance became compulsory in the UK in 1931. General Accident issued over 50,000 more motor policies that year than it had done in the previous 12 months.
Germany followed suit in 1939 with the snappily-titled ‘Act on the Implementation of Compulsory Insurance for Motor Vehicle Owners’.
As the popularity of motoring increased, inevitably so did the range of risks that insurers were required to cover. Although, theft of the vehicle has been an ever-present threat for motorists - including this unfortunate customer who submitted his insurance claim in 1962:
The future of motorised mobility
The future of motoring is built on vehicles you can rent for a short time. The cost will include your insurance. You won’t have to worry about whether your vehicle is safe and roadworthy - vehicle manufacturers will do that for you.
It’s not exactly a new idea. Hire vehicles have been around for decades. Pay-as-you-go bicycles pop up in cities the world over. You can split taxi fares on ride-sharing apps.
It’s the insurance need that’s changing.
Instead of directly insuring a consumer for their vehicle, businesses will need to insure a vehicle manufacturer or the provider offering the ride-hailing, car-sharing or car club services.
And it’s already happening. Axa have announced a partnership with By Miles on pay-by-mile car insurance. Working with Qover, they’ll also supply rider liability insurance to Deliveroo drivers in Europe.
Allianz offer third-party liability and comprehensive insurance for electric vehicles from a German company called Street Scooter.
Jaguar Land Rover has launched Carpe, a new ownership model that essentially packages ownership costs together in a single monthly payment. This includes the car, tax, insurance, maintenance and breakdown assistance. Allianz underwrite the insurance element of the package.
Last year, Aviva became the official insurer of Lyft in Canada. Lyft’s commercial insurance policy with Aviva Canada covers drivers from the point at which they accept a ride request to the passengers leaving the vehicle.
"The level of autonomy in vehicles is increasing along with artificial intelligence. These will have a massive impact on motoring which will ultimately pave the way for fully-autonomous vehicles.
"As the technology on vehicles changes, insurers will have to adapt to provide the policies and cover that consumers require. Road safety, claims and insurance will continue to change as mobility evolves and transportation develops."
Attitudes to driving are changing in major cities
Focused on the need to reduce pollution, many major cities restrict or charge vehicles in congested areas to encourage drivers to use ‘greener’ alternatives.
The Singapore government worked with the Bolloré Group to launch BlueSG in 2017. BlueSG is a car-sharing service which allows members to access a network of shared electric vehicles 24 hours a day.
The year in which Uber drivers, in London, will be banned from using vehicles that aren’t hybrid or electric.
In India, car ownership in big cities is becoming less attractive. According to the India Times, car sales dipped three months in a row in late 2018. Long commutes, traffic queues, parking troubles and steep fees are putting young professionals off car ownership. Ride-sharing apps like Ola-Uber and BlaBlaCar are now popular instead.
Owning a car simply isn’t the status symbol or beacon of convenience it once was.
No-one can say for certain what the future holds. But people and businesses will move themselves, their families and their goods differently in future. So, their insurance needs will inevitably change. Again.
Claims, blames and automobiles
Take a look at some of the changes in motor insurance from the time when cars first appeared on our roads in our history of cars, insurance and claims infographic.
Or read our full 'Claims, blames and automobiles' report for more about the evolution and the future of motor insurance: