CB Insights recently published a nice summary of alliances between automakers and insurers that provide insurance as part of the lease. Some insurers have also partnered with startups pushing a differentiated car ownership model, like Carma and FAIR.
These offerings have the potential to nibble away at the personal auto market from two different directions. At the top, high-net-worth consumers who lease luxury cars are likely to be less price-sensitive and more highly value the convenience of a bundled lease/insurance option. At the bottom of the market, fractional or shared car drivers may opt out of car purchasing and separate insurance purchasing all together.
These emerging models are an interesting twist on the idea of usage-based insurance. Consumers don’t necessarily want more transparency and interaction with their insurers in search of the perfect rate for that day. They may just want insurance as an OEM to the brand they have a real relationship with, or as a set-it-and-forget-it subscription product.
One can argue about whether this is necessarily a good or wise move on behalf of consumers, but it’s hard to argue that it’s not easier. Insurers should take a careful look at their value propositions to their target customers and make plans to compete based on what their customers value.
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