Seismic changes in the mobility industry are colliding with those in insurance, presenting new opportunities to all stakeholders that participate in the mobility ecosystem. Tapping into this opportunity will depend on an insurer’s capability to innovate, collaborate, and adapt—and to form new cross-industry, cooperative relationships. McKinsey recently spoke with Rebecca Beckert, an associate partner in the Cologne office, about the dynamics of these shifting symbiotic relationships.
McKinsey: What are the key trends that are shaping the mobility industry? How will they affect the insurance industry?
Rebecca Beckert: McKinsey analyses suggest the mobility industry’s transformation could put up to 20 percent of a traditional European insurer’s retail car gross written premiums (GWP) at risk over the next ten years. Three main trends are driving this potential erosion of business: changing mobility consumption, technical advances, and the emergence of new mobility insurance competition (mainly from car manufacturers). First, as mobility and consumer behavior continue to evolve, the number of vehicles on the road will flatten out, especially in Europe. After 2030, we can even expect a shrinking car parc in mature markets. The uptake of shared transportation or micromobility will be especially high in urban areas, where up to 60 percent of total mobility will not involve private cars, by our estimates. Consequently, the overall insurable business volume on private cars will shrink.
Second, claims frequency will decrease as technology advances, through innovations such as automated driver assistance systems (ADAS) and, later, autonomous driving. Claims severity is also likely to fall over time. Based on the Society of Automotive Engineers’ standards, we estimate that by 2030, more than 15 percent of vehicles will be equipped with Levels 3 and 4 autonomous driving capabilities [conditional automation and high automation, respectively], compared with only 2 percent in 2025. As a result, claims volumes and premium volumes will likely shrink.
Third, car manufacturers that offer insurance will increase competition. Across Europe, approximately 60 percent of all new car sales in 2030 will involve direct-to-customer distribution models as OEMs seek to own the customer interface. In this environment, customer-oriented add-ons and services, including insurance, will become increasingly important at the point of sale and beyond.
McKinsey: What might mobility insurance look like in the future? And what role could incumbent insurance companies play in this environment?
Rebecca Beckert: Despite all the risks, uncertainties, and challenges, one thing became very clear over the past few years: insurance will be everywhere, regardless of whether it’s noticed, appreciated, or perhaps even liked. These shifts in mobility provide ample opportunities for new business models and value propositions.
To start, the intersection of mobility and insurance is becoming increasingly relevant. Partnerships are becoming more popular in areas such as embedded insurance, telematics solutions, multimodal offerings, and car subscriptions. This level of cross-industry cooperation signals a clear shift toward long-term strategic partnerships between insurers and mobility providers. Such partnerships are broader than typical white-label specialists’ provision of discrete services such as underwriting and may involve data sharing or shared participation in the aftermarket; and joint ventures could replace traditional, commission-based models.
Second, McKinsey analysis suggests that by 2030, approximately 25 percent of the global GWP in P&C insurance will be “embedded,” with the insurance quote-and-buy process directly integrated into the car purchasing or ordering process. Insurance premiums might even be embedded in a car’s price. The growth of new shared mobility models, such as subscriptions, car sharing, and long-term rentals, could also increase the amount of embedded insurance. As insurance becomes more integrated and less visible, however, customers will have more difficulty differentiating provider value propositions. Strategic partnerships and new forms of visibility, such as those available via ecosystems, can help prevent commoditization.
Insurers have also only scratched the surface of mobility ecosystems. Their options for how to engage are generally twofold: the first involves participating actively as a mobility provider. Under this model, insurers can offer car rentals to replace damaged cars in claims or assistance cases, or they can expand into subscription and car-sharing services as well as car sales and parking solutions. These initiatives help keep customers within an insurer’s mobility ecosystem. Alternatively, insurers can become ecosystem orchestrators and facilitators, which brings together an attractive and curated offering of various business partners onto insurers’ platforms to provide a seamless and satisfying customer experience along the entire value chain.
Finally, there will be many opportunities for insurers to expand into data-driven business models. Insurers should comprehensively integrate data in their plans from the beginning of the customer’s journey to the end because it will become the foundation for tomorrow’s business offerings and models. As data becomes more important, insurers will benefit from identifying the most reliable data sources for different use cases, the relevant data providers, and the most attractive business partners based on the data they could contribute.
McKinsey: Have incumbents that have not started to rethink their business models missed their chance?
Rebecca Beckert: The mobility disruption has just begun. Multimodal mobility is still in an early stage; it will take some time before connected cars are the new normal. And only from 2030 onward will trends such as autonomous driving fundamentally change the mobility and insurance industries. So there are still plenty of opportunities for insurers to enter the new mobility game. But one thing is also clear: market shares in new mobility markets will typically be shared among first movers, as we have seen with electric-vehicle insurance. So now is the time to act.
Rebecca Beckert is an associate partner in McKinsey’s Cologne office.
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