The world of mobility is changing radically – and insurers must adapt. ERGO Mobility Solutions was founded in 2017 to tap into the opportunities made possible by the sea change in mobility. The unit’s interdisciplinary core team of 25 people plus additionally about 75 colleagues in Nürnberg and China, overseen by board member Karsten Crede, relies on a broad range of partnerships, capital expenditures, innovative products and – most important of all – a wealth of expertise in mobility technologies and IT.
All motor vehicles have internal combustion engines? People pay cash for vehicles, or turn to financing? Owners take out comprehensive cover for their vehicles? The same people drive a car for many years? All of that is changing. More and more vehicles have electric motors. Driver assistance systems are increasingly intelligent. More and more vehicles are being leased, some of which are shared by different people. According to McKinsey, the percentage of trips in private vehicles is expected to decline from 82% now to just 59% by 2035. What’s more, two out of three new vehicles registered in Germany nowadays belong to corporate clients.
The average age of people purchasing new vehicles has been increasing for years, a trend explained not only by a lack of purchasing power or rising prices. “Young drivers are interested less and less in the age, image, design, and performance specifications of their vehicles. And some young people do not want to own a car at all,” writes Karsten Crede on LinkedIn. He adds that people in this target group instead prioritise total cost of mobility, or TCM, regardless of the mode of transportation – and many of them do not want to depend on a costly private vehicle. “For this reason, fewer and fewer people regard owning a car as the ultimate in personal mobility,” sums up Crede, before arguing that “a wide-ranging shift in thinking” is needed in the mobility sector. Crede adds that connected and personalised services for mobility and communication will be the genuine drivers of growth.
The insurance industry likewise needs to adapt, as its core product for vehicles – conventional motor insurance – is no longer the ideal solution for people’s modern mobility needs. In addition, enhanced driver assistance systems and autonomous vehicles will likely further impact premium volume.
“That is why we are working today on the products and services of tomorrow,” says Karsten Crede, before sharing an example. “Consider the high total cost of electric vehicles, which continues to impede their mainstream breakthrough: The cars are expensive. Their batteries are expensive. And insuring them is comparatively expensive. There is a significant opportunity here for ERGO. By partnering with automotive manufacturers early on during development, we jointly brainstorm ways of making electric vehicles smart and, above all, inexpensive to insure. We as an insurer thus learn about the automotive industry’s processes and acquire engineering expertise. In turn, we help reduce the total cost of electric mobility, while fostering this technology and benefitting the environment.”
In short, partnerships between the mobility sector and insurance companies can directly lower the overall costs of mobility, even spanning different modes of transportation. With an eye towards unlocking this potential for savings and innovations, ERGO Mobility Solutions pursues partnerships on equal terms in every corner of the mobility industry – ranging from traditional carmakers, automotive dealerships, and car hire companies to innovative start-ups and car-pool solutions. As the following examples make clear, several chapters have been added to our success story since late 2016.
BMW: Seit ERGO has supplied the insurance component for the Munich-based automaker’s leasing packages since July 2020. In addition to these fairly traditional motor insurance policies, ERGO and BMW are also partners for development and innovation – with a focus on jointly driving forward innovative products and services. To name just one example, the two companies developed a racetrack policy that provides supplemental cover for the Nürburgring and other racetracks. What’s more, customers can take out the policy online.
Great Wall Motors: In close collaboration with one of China’s most innovative automotive manufacturers, with (pre-pandemic) annual sales of over one million cars, ERGO and Great Wall Motors have established a joint venture for mobility-oriented product and service solutions that are driven by technology and data. ERGO naturally also supplies its partner with products such as industrial cover for the manufacturer’s factories, commercial policies for its dealerships, and private insurance for GWM’s 70,000 staff members.
NRW-Garage: ERGO Mobility Solutions met the requirements of this car dealership group by designing a special IT platform that quickly provides customised and inexpensive offers for motor insurance. “Our partnership with ERGO enables us to continually develop intelligent mobility services and service components that satisfy the various expectations of our customers,” says Christoph Pauli, head of NRW-Garage.
Volvo: ERGO Mobility Solutions has entered into a similar strategic partnership with the Swedish automotive manufacturer to develop innovative mobility services. ERGO is also the insurance partner for Care by Volvo, the company’s car subscription service. “Industry insiders expect subscription models to one day attain a market share of 40%. That makes it even more important that we position ourselves in this market now and gain valuable expertise,” explains Karsten Crede. Last but not least, anybody can use the partnership’s innovative Volvo Car Protection app to purchase insurance in a matter of minutes for drives abroad, hire cars, luggage, or additional drivers. This app even won a prestigious Red Dot Award in the autumn of 2019.
Text: Ingo Schenk