New Mobility

"A smart car needs smart insurance"

What is mobility likely to look like in the future - and how do these trends affect the insurance industry? Will consumers prefer to buy their cars online in the future? And by when could autonomous driving become commonplace? Karsten Crede, Head of ERGO Mobility Solutions, describes his view of "New Mobility" in an interview.

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Mr. Crede, you are responsible for ERGO Mobility Solutions (EMS). What does EMS deal with?

Roughly speaking, we work together with our partners from the automotive industry on intelligent insurance solutions in the areas of electromobility, autonomous driving and digitalisation. The car of the future combines these three technologies into a total work of art that is controlled by a central computer using real-time data. You could therefore also say: a smart car needs a smart insurance. In order to achieve this, we have built up a specialised organisation in EMS that is familiar with the rules of the game and changes in the car industry in addition to insurance issues. With innovative solutions such as subscription models, in-car-solutions, i.e. insurances that are integrated into the car software, on-demand offers and combined leasing/insurance solutions, we have already been able to successfully establish ourselves as a partner of renowned car manufacturers such as BMW, Great Wall Motor and Volvo.

To what extent do the new mobility trends affect the insurance industry?

The character of today's car insurance is to cover a risk that is easy to calculate. As a rule, privately used cars are driven by one or two people, stand unused in the car park for 23 hours a day and have only minor software functions that have nothing to do with the direct operation of the vehicle. Once or twice a year, they have to go to the workshop and the average age of vehicles in Germany is just under ten years. The vast majority of accidents are due to human error. This will change fundamentally. The essential factor for the change in mobility is first of all the fact that future cars will be a novel combination of electric drive, autonomously driving components and diverse services that constantly receive "over-the-air" software updates. This changes the risks arising from the use of a vehicle. Car manufacturers can, for example, adapt additional assistance systems or even engine performance at the push of a button. We have to adapt to this on the insurance side and ensure that we understand the technological changes and translate them into flexible, tailor-made insurance solutions. It will be particularly important to understand the central software of the vehicle, the operating system, because this is where the relevant vehicle and driver data are processed. The individual safety status in the form of assistance systems, autonomous components and driving profile will have a significant influence on the customer's risk situation.


And what will the future of mobility look like in your view?

Individual mobility will have to become more environmentally friendly. The traffic and transport sector accounts for 16 percent of global CO2 consumption, 50 percent of which is due to individual transport. So we need a high share of electric vehicles with electricity from renewable energies and the corresponding charging infrastructure as soon as possible. I am confident that we are now making rapid progress and that the German car industry in particular has now done its homework. However, we still need to make much faster progress on the charging infrastructure. In the medium term, after 2025, we will probably see the first shuttle services with autonomously driving vehicles in pilot operation. Despite the high complexity of sensor, computer and camera technology, Volkswagen, for example, assumes that around 40 percent of all vehicles will be able to drive autonomously from 2035 onwards. In this segment, too, it will be exciting to see which providers prevail. In addition to the traditional carmakers, we have to reckon with the big American and Chinese technology companies such as Apple, Waymo and Baidu. In my view, the need for us to think more about cross-modal mobility concepts is still being neglected. The so-called usage patterns, especially of younger people in urban environments, show that many would like to have a combination of temporary car use, public transport, cycling and sometimes even air travel. This requires more advanced solutions, which are being discussed under the heading of Smart City.

What are the challenges on the way to the new mobility world?  

For all providers, the manufacturers, the financial services units, the dealers, the software companies and also the insurers, it is an enormous challenge to earn money with the new mobility concepts as quickly as possible. While enormous investments are needed in the development of new concepts and also in the infrastructure, it is necessary to trim today's business model to maximum efficiency in order to finance the necessary investments. I see another common challenge for both the car and insurance industries in dealing with customers. We need to get closer to the customer and understand their needs better. There is a big difference between talking about customers in the German province, on the US West Coast or in a Chinese megacity. As an international car or insurance player, you need answers for all constellations. For the tech-savvy Chinese customer as well as for the critical German customer who is concerned about the security of his data. We also have to adapt to the fact that customers want to buy cars and insurance online as well as from retailers. Keyword: ROPO, research online, purchase offline. In any case, no provider can meet all these requirements on its own.

How important are partnerships and cooperations for you on the way to new solutions for the mobility trends of the future?

It is crucial to develop smart and innovative cooperations that help us achieve our goal of becoming a so-called ecosystem player in the automotive insurance business. The term ecosystem describes a kind of network of cooperating partners who together provide top services to the customer. In Germany, for example, we work together with BMW in the leasing business, use the software of our partner SAP for this, and cooperate with the Innovation Group in claims management. And that is by no means all. We have a strategic cooperation and development partnership with our Chinese partner Great Wall Motor, which is planned for both the Chinese and the German market. There, we are working on insurance and reinsurance solutions as well as data-driven insurance concepts, among other things. In my estimation, it is above all those companies that succeed in developing a special strength and performance out of the cultural differences between companies and countries that will prevail. American entrepreneurship with German engineering comes to mind, or the sustainability of German insurance companies like ERGO paired with the ambition of our Chinese partners from Great Wall Motor.

What topics are you currently working on, what do you want to push forward next?

With our products, we want to help pave the way so that taking out insurance will be much quicker and easier in the future. We also want to bring about a change in counselling. 30 questions and a three-hour consultation for the sale of an insurance policy are simply too much. It has to be quicker, and this is where we as EMS want to be pioneers with our products. The goal must be to make it possible to close a deal in ideally three minutes. Online sales should also contribute to this in the future. This is a large growth market, especially for the area of mobility insurance. We are also working on expanding our technological expertise in the core areas of electromobility, digitalisation and autonomous driving. For example, we want to offer battery warranty insurance in the future. The resources of today's insurance technology are not sufficient for this. Among other things, we must be able to anticipate the ageing processes of batteries. Here, too, it will not work without cooperation.

What role does China play in the future of mobility and for EMS in particular?

We see that China is the largest and most important market in the field of mobility in general, but also specifically in the electromobility sector. Over the past years, many forces have been bundled there, for example through government subsidy programmes, to make the Chinese car industry fit for global competition. The many joint ventures in the mobility sector that have been established with Western companies over the past decades are now paying off for the Chinese. This acquired know-how combined with a very innovation-friendly society makes China an interesting market for observing new mobility concepts in practice and learning from them. We in Europe can and want to benefit from the local experience. With Great Wall Motor, for example, we founded a successful joint venture in 2019. We are constantly working with our Chinese partners on new mobility solutions for the Chinese market and want to use these insights for other markets as well.

Interview: Jan Fulle

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