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Posts Tagged ‘insurance’

Insuring the Future of Auto Insurance

In Brand Name Development, Brand Naming, Branding, Business, Cars, High Technology, Naming on August 29, 2016 at 9:01 am

From our Summer 2016 Automotive Think Tank Blog

Insurance

Robots can be programmed to drive. Humans can’t.

The result, as Burkhard Bilger notes in his New Yorker article, “Auto Correct,” is that humans run red lights, take curves too hard, brake at the last minute, refuse to signal when changing lanes, fiddle with knobs, and take pity on stray turtles crossing the street. These careless human errors account formore than 90% of all car accidents.

But if autonomous cars ultimately replace drivers, the risk and number of accidents should decrease. While current car-owners will probably welcome that news—after all, fewer accidents means lower insurance costs—insurance companies may not feel the same way. Are current auto insurance companies destined to become relics of the past as we transition to driverless cars? If not, how can they rebrand themselves to stay competitive and relevant in this new space?

While the national car insurance rate is $900 on average per year, each car-owner pays a varying amount based on his/her state of residence, marital status, years of driving experience, number of tickets or violations, and his/her car’s model, maker, and year. For example, in California, a single female who has been driving for 9 to 15 years, has only one traffic violation, and covers 12,000-15,000 miles per year will pay about $927.29 annually. A single male with the same background will pay about $929.74 annually, slightly more than his female counterpart.

With autonomous cars, though, car-owners will no longer have to account for human-caused accidents, like being rear-ended or hit by a drunk, drowsy, or otherwise distracted driver. They may have to pay some costs to cover non-crash damage, but their annual auto insurance costs will dip several hundred dollars, if not more. A Usage-Based Insurance (UBI) policy, one that charges consumers based on how often they use a vehicle, could further diminish those costs, especially if individuals use their cars infrequently. Individuals who use an autonomous car 20 times a week would pay twice as much as those who use it only 10 times. UBI is already in effect but could easily gain traction in the future.

Because car-owners could spend less money on protecting their car, they may instead spend more on the car itself or on hailing a luxurious autonomous ride. As a result, products from Porsche and Jaguar, among other high-end car brands, may be more affordable and more common in the future than they are now. The names of their new brands may reflect this new democratization;  Jaguar, for example, could rebrand their Elite-Care coverage as Refuge: a name that represents essentiality and universality rather than high-mindedness.

But, while these automotive insurance brands may succeed, auto insurance companies would still face lower insurance costs and thus a smaller payout. How can they stay afloat in these conditions?

There are two potential options. The first is that these companies can stay in their auto insurance marketplace and calculate and enforce costs for autonomous cars. These prices could be based on the vehicle’s number of years on the road, the average number of miles it covers annually, and its most recent software update. Such a position would allow auto insurance companies to stay in their current marketplace, though they may have a smaller scope and net profit than they do now.

They could also choose to leave the auto marketplace entirely. For example, State Farm, an auto insurance giant, recently filed a patent application to rebrand itself as a “Life Management” company: one that will collect data to make suggestions for your home and health, not your car. This new branding position allows State Farm to adapt to the changing insurance world without losing its reputation as a leader in the category.

Because of these changes, we may see a surge of rebranding in auto insurance companies as they attempt to communicate their new values. But, regardless of whether these companies desire to remain in the automotive industry or not, their choices will pave the way for emerging—perhaps entirely new—forms of auto insurance.

-Eva Epker

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The Road Ahead

In Brand Naming, Branding, Business, Cars, High Technology, Naming on June 22, 2016 at 8:30 am

From our Summer 2016 Automotive Think Tank Blog

The-Road-Ahead

The automotive industry has seen momentous, impactful changes over the years — power steering, air bags, antilock brakes — but nothing that has quite reframed mobility in the way that today’s developing technologies will. As the prescient futurist and science fiction writer J.G. Ballard said more than 40 years ago, “The car, as we know it, is on its way out.”

But what exactly are the implications of these changes from a brand perspective?

Rumblings of a revolution can be traced back to when Google started its autonomous vehicle work over five years ago. To many, it seemed like a flight of fancy or a PR stunt. But, 1.5 million self-driven miles later, hands-free driving is no longer a Jetsons-like fantasy, but an imminent reality. And it’s not just Google that is spearheading this movement.

GM has invested half a billion dollars in the ride-sharing service, Lyft, to build out their autonomous fleet. They’ve also launched Maven, a ride-sharing service that flies in the face of outright car ownership. And other major players aren’t passively waiting on the sidelines. Volvo has promised autonomous driving by 2020, Audi is queuing up high-end electric vehicles, and Ford has launched a subsidiary called Smart Mobility to design and build technologies. Clearly, no major player in the industry is sitting on the sidelines.

Even the industries around cars are innovating for this not-so-distant future. State Farm, the largest auto insurer in the United States, and Travelers, a big global player, are filing patents for technologies that are befitting of Silicon Valley start-ups.

From a technology perspective, the road ahead seems pretty clear. But from the branding viewpoint, it’s not. America has a rich car culture embedded in its history, and these changes will undoubtedly affect its future. The outcomes of this transition will be felt at home and across the globe.

That’s why Lexicon Branding has put together a ten-week think tank to speculate about the changes and opportunities automotive brands will face as they drive into the future. Our team here at Lexicon is leveraging our extensive experience in automotive branding to help existing brands, new companies, and consumers successfully navigate the upcoming landscape.

– Kennedy Placek, Michael Quinn, and Sarah Schechter