How will the changing shape of insurance affect logistics businesses?

Before I get too deep into this article, I need to justify my conclusions with some context. I shall introduce three points to highlight significant market opportunities and industry shortcomings.

Market Context

The UK is pushing hard to introduce autonomous vehicles on public roads in 2025. If this is news to you and you work in the road haulage or last-mile delivery business, you are very much out of touch with market influences.

We recently encountered some very rudimentary and ineffective transport management practices. The measures were to reduce drivers' hourly pay. However, the business had no accurate means of tracking drivers or accurate working-time estimates. So, an inexperienced driver would undoubtedly take longer to deliver, and experienced drivers would work slower or take longer breaks, thus negating any perceived savings and reducing customer service.

Road transport is experiencing significant change that is predominately technology driven. These changes are driving disruptive transformations in vehicle insurance.

Lloyd's, arguably the UK and probably the world's largest insurance company, has taken on the challenge and is fostering Insurtech companies to help guarantee their position as industry innovators.

What are InsurTech companies?

Insurtech is a term used to describe the use of technology to improve or disrupt the insurance industry. Insurtech is typically used to describe technology-focused startups creating innovative products and services to improve how insurance is sold, managed, and utilised. InsurTech companies typically utilise data analytics, artificial intelligence, and other technologies to create new and improved products and services for the insurance market.

Through their "Lloyd's Lab", the insurers are driving innovation, which could mean those customers unable to provide accurate risk management information will be subject to higher premiums.

The insurance industry will need to evaluate the risk and liability of autonomous vehicles and insure them accordingly. At Zengi, we have started assessing some profitable ecosystem changes to vehicle safety and compliance.

The imminent introduction of Chat-GPT4 further presents opportunities to use machine learning, artificial intelligence and natural language processing to provide the insurance industry with predictive risk mitigation and collaborative assessment.

Insurance companies need to assess the safety features, maintenance, and other aspects, not only for early adopters of autonomous vehicles but also for those businesses that continue to use driver-operated vehicles, to effectively price and insure or indemnify the companies that operate them.

Conclusion

Insurance is an essential and financially significant part of operations for anyone transporting goods or people. As we approach 2025, appropriate protections and assurances will become mission-critical for companies looking to use autonomous vehicles.

The ability to measure and report risk, compliance and culpability will become the mainstay of a reputable business. Future policies must consider accidents and loss during delivery but also contain the legal and regulatory implications of adopting autonomous vehicles. Policies will need to be capable of maintaining compliance with the introduction of new laws.