Two trends are most likely to cause disruption in the automotive insurance industry.

First, smart mobility and multi-modal transportation; second, advanced driver assistance systems (ADAS) and autonomous driving.

Both cause the insurance industry to be more aggressive in its future development. Why? There are four reasons.

1. Accidents will decrease, causing a precipitous decline in claims and premiums 

More than 90 percent of accidents are caused by driver error. In a 2014 study by the Highway Loss Data Institute, ADAS features enabled bodily injury liability losses to drop 40 percent and medical payments to decrease 27 percent. As we move toward more ADAS features, like automatic emergency braking systems on nearly every new car within the next six years, and fully autonomous driving — these positive impacts on driver safety and reduced accidents and claims will continue.

2. Smart mobility creates a need for new forms and means of providing insurance

Multi-modality (use of not just cars, but bikes, dynamic shuttles and trains) is creating more consumer choice for transportation. As more consumers use multiple modes of transportation, new means of insurance may be required. Car sharing and loan sharing will also create the need for temporary insurance for the parties involved, and an easy way to deliver these new insurance services. When you add in the possibility of "purpose-built" vehicles for car/ride-sharing, insurance risk modeling is only likely to get more difficult. As original equipment manufacturers (OEMs) look at providing more programs like Audi's recently announced Audi Shared Fleet, one wonders if we are headed toward a world where we pay for miles driven. As OEMs provide more fully comprehensive mobility programs, many are counting on loyalty not just to their vehicles — but also to them as the brand for how customers move around from one destination to another. 

3. Data-driven insurance is becoming a proven win-win for providers and customers

It's becoming clear that consumers want the benefits of reduced premiums that come with data-driven/usage-based insurance (up to 30 percent). There also are proven benefits for the insurers in terms of more accurate risk pricing models and better claims processing. That could be why companies such as Toyota announce it will provide usage-based insurance going forward. OEMs are partnering with insurers and other providers to offer these services to their drivers as well. As self-driving cars become more likely in the marketplace, insurers are wondering whether the liability will shift from drivers to the vehicles that are making most — if not all — of the safety decisions.

4. Advanced analytics is the key to provide the best insurance risk modeling and pricing services

With respect to data-driven insurance, we've seen how thousands of combinations of data such as location, braking, duration, road type, distance traveled, collisions, direction and others can optimally predict risk as well as provide the best emergency services when accidents do occur.