The world of automobiles, driving, and auto insurance is fascinating at the best of times. It’s also more than a little confusing for a variety of reasons, including variations in premium costs and government regulations.

Here are the five changes this space will see in 2024.

Adoption of Electric vehicles

While consumer demand is rising, there is still some inhibition in the minds of consumers because of the EV infrastructure, comfort, and cost. To curb tailpipe emissions and reduce them to zero by 2035, many American states are contemplating a ban on the sale of gas cars. These states include California, Maryland, New Jersey, New York, and more. This regulatory move will be disruptive, as policies and premiums will be revised.

EVs come with advanced technology, reducing the risk of accidents. Also, EVs have around 20 components or parts as compared to 2,000 parts in normal cars, making them a cheaper option when it comes to maintenance and changing affected parts. Due to this focus on reducing accidents and cheaper repair and maintenance, over time the premiums to be paid for EVs might be a bit lower.

Rise in insurance premiums

Auto insurance premiums are on the upward march year after year. Currently, the average auto insurance premium is around $1,547 per year; however, the premiums vary a lot depending on many other factors like state rules, usage requirements, etc. States such as Delaware, Florida, Kentucky, Louisiana, and Missouri, among others, have surpassed the average cost and have become around $2,000 in recent years. This rise in premiums is due to many reasons, like increasing costs of repair, expensive parts, medical expenses, legislative fees, etc. In 2024 and beyond, a great focus will be placed on how these insurance premiums can be controlled, managed, or justified.

This rise in premiums is likely to impact the auto insurance industry in both good and bad ways. Insurance companies, when charging such high sums, would need to provide the best-in-class facilities and they will have to enhance the overall customer experience. This is good. However, rising premium costs will dampen sentiment and hurt growth in the long run. This is bad!

Technical upliftment and integration

In the US, around 43,000 fatal accidents happen every year. This number is tragically high. The good news is that many auto manufacturers are turning to technology to control that. They are using technology that collects real-time data, which allows for easy vehicle diagnosis and enables advanced systems. The new generation of cars is getting semi- and fully automated. Smartphone applications and telematics are getting largely used, to track mileage, speeding, video recording, or bad driving habits, etc.

This advanced technology is being used in both passenger and commercial vehicles. And that’s impacting the auto insurance space too.

Using technology, such as dashboard cameras and others, is a great way to keep records intact when there is an accident and to facilitate claims as and when needed. Such technologies are also helpful in improving risk assessment and operational efficiency, enabling smarter and more appropriate premium decisions. These technologies are also helpful in automating the process for procedures like underwriting.

2024 may be the year the auto insurance segment adopts technology in a big way.

Personalization becomes key

Every brand or industry tries to make things and processes easy for consumers. This has become so common that consumers now look for these conveniences in all segments. 2024 may be when the insurance sector catches on to this trend.

Premium costs could be tailored to the extremely specific needs of the auto owner seeking insurer using many more data points than are applied now. The cover could well be designed to fit the exact and nuanced needs of each user. Also, insurance claims, procedures, and documents are not that easy to understand, so it is important to provide personalization and easy communication, which has become the need of the hour.

Such personalization will help users in getting the right insurance coverage without being under or over-insured. When such personalization is implemented, it will become easier for users to compare the pricing and coverage options from different insurance providers and make the best decision.

Usage-based insurance hype

Usage-based insurance is getting a lot of hype. According to reports, the market is going to grow at a CAGR of over 21% by 2028. This trend will be enabled by many reasons like technological advancements, government regulations, etc. Usage-based insurance is making it possible for the insured to get insurance policies that cater to the specific usage patterns and behaviors of consumers, rather than paying for a policy that might be inappropriate for their needs. Moving forward, this could become a key factor in determining the premiums for drivers and how their claims are processed. For instance, incentives and low premiums could help reduce accidents by promoting safe driving and penalizing behavior like driving under the influence.

As auto insurance is mandatory, these advances could have a massive impact on how Americans buy, drive, and insure cars. Maybe we will look back at 2024 as the year all this started!