As Mobility as a Service grows, the insurance sector must evolve

Cars on road with network signals
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This article originally appeared on MeetingoftheMinds.org.

Our transportation systems are rapidly changing and developing, as we’re seeing increased demand for more personalized and convenient mobility services. All sectors that make up mobility services — private and public transport operators, IT and leasing companies and user associations — are challenged to offer new services, and build new partnerships and business models.

Mobility as a Service (MaaS) is a reality, Europe being the frontrunner in the market. Many MaaS services and solutions are available in cities around the world thanks to the cooperation of public sector and private companies which facilitates the aggregation of different transport services. However, there is a sector which is not yet fully integrated into the greater MaaS picture, but is of crucial importance for the growth of MaaS in Europe and globally: the insurance sector.

Insurance companies play a central role in the transit user’s life and mobility. How can the insurance sector evolve to fit users’ need for multimodality, while also serving the needs of the service providers? How can insurance products accommodate the multimodality aspect of transit that is distinctive of MaaS?

When talking about advantages of MaaS, flexibility is often the most sought-after characteristic for categorizing the success of personalized mobility. The flexibility to change plans last minute is one advantage of owning a private car that MaaS is looking to compete with. One solution could be to empower MaaS providers to sell insurance products to end-users, similar to what is available for flights to allow some additional flexibility through term policies, in case the user would like to reschedule or cancel the trip.

Another possible role for insurance to play in the MaaS ecosystem is related to the multimodal journey, using transit systems. There is currently no comprehensive insurance framework for covering the entirety of a multimodal trip, in the case of an incident. A MaaS journey can consist of a ride with an e-scooter, a tram trip and ride with a shared car. In this multimodal reality, the status of the traveller varies depending on the mode they are using and the respective passenger right scheme. There is no comprehensive framework covering the whole trip in case of an incident. Given the multimodal nature of MaaS, shouldn’t insurance products be developed in a way to cover more than one transport leg and one mode?

In the future mobility ecosystem, this issue could be overcome by providing a comprehensive personal mobility insurance or offer policies through an aggregator, as a part of the MaaS service. In both cases there would be several options. One option would be whether the insurance applies only to the insured person or also covers the property, liabilities or financial losses. The insurance can be included or offered as an add-on product to any MaaS offering. Adding an insurance element into MaaS and new mobility service offerings can be part of transit company branding, and could become a differentiator in the market. As MaaS becomes more popular for business mobility use, there will be more demand for widely comprehensive insurance products.

MaaS can create new channels and business opportunities for insurance companies. In the future, the main revenue stream of mobility insurance is expected to be fleet insurance, end-user related insurance (for on-road accidents, property loss and damage, third party and liability, trip cancellation and delays), and insurance for the workforce. In order to unleash this new potential, the first step is to gain understanding of which products are already covered within the new mobility ecosystem and which are not. MaaS Alliance is working on a gaps analysis to establish a clear picture of what elements in the new mobility ecosystem are covered by existing mandatory or additional insurance schemes. This research will support the insurance sector in designing comprehensive insurance products for different modalities and segments.

Another challenge that insurers will face is risk management in a MaaS environment. When focusing on new mobility services which have shifted from ownership models to rental and usage, insurance companies may need data on the usage and user behaviour to calculate the risk. Traditionally for private cars, the risk assessment is done based on the driver’s behaviour and their driving history. Access to MaaS data can be a challenge as it requires willingness of service providers to share data across the value chain, and transparency with the public with the use and purposes of the data collected.

Embedding insurance into different offers is possible, by proposing it directly to customers as an additional service or integrating insurance with the MaaS offering. Some mobility service providers, such as car rental companies, sell insurance as supplementary services, creating an additional source of revenues for their companies.

There is very clearly a place for insurance companies in the new mobility service market. We need strong cooperation from all parties involved in order to implement pilot projects and share success stories and business practices. We at the MaaS Alliance work as a facilitator and reference point to unleash the full potential of MaaS by gathering public and private sectors from Europe, North America and Asia-Pacific regions.

These thoughts were the outcome of an experts’ workshop organized in September by the MaaS Alliance and the U.S. counterpart, MOD Alliance, featuring insurance companies and key players of MaaS and mobility industries. The North American leg of the workshop will be hosted later in the year. Analysis and roadmaps will be discussed further, also addressing the differences of EU and U.S. jurisdictions.