Opportunities for Multimodal Mobility Insurance

In theory, mobility is shifting toward shared use, to the detriment of the private car. In the age of multimodal mobility, insurance will mechanically follow: We no longer insure a person, but their mobility in all its forms, with a single insurance contract.

But in reality...

Desperately seeking multimodal products

Ideally, I'd like to be able to take up an annual policy that covers my personal vehicle, as well as third-party liability, personal injury insurance, legal protection and assistance when I rent a bike or scooter, and personal injury insurance when I use ride-hailing services.

Does such a contract exist? I did a little analysis (without claiming to be exhaustive), and here's what I found:

• Insurance offers covering shared mobility: Ma Mobilité AXA, launched in 2016 by AXA in France, covers personal injury, legal protection and assistance, but this product is no longer listed. MyMobility by Allianz in Italy, launched in 2019, covers shared mobility for tourists visiting the country. But in both cases, these are temporary insurances, not targeted at year-round users.
• Products dedicated to certain types of alternative mobility: Aon supports Flee in Italy, which covers (via usage-based insurance, or UBI) the rental of a vehicle coupled with a car-sharing service with pre-designated drivers. Moonshot Insurance offers insurance dedicated to green micro-mobility in Europe (e-scooters, e-bikes, kick-scooters, etc.).
• Extended cover for renting (or sharing) vehicles is quite common with traditional insurers or car-sharing platforms.
• Finally, there is Swinz, in Belgium, which offers home insurance, coupled with personal liability, assistance, legal protection and green mobility comprehensive cover. We are getting closer to the multimodal concept, even if the core of the product is actually home insurance, with ancillary cover.

In short, the dream scheme doesn't seem to excite insurers... or maybe I'm the one with the twisted fantasies... or maybe the subject is more complex than it seems.

See also: A New Approach to Embedded Insurance

For insurers, is multimodal mobility insurance even a topic?

In reality, the concept of multimodal insurance faces serious insurance pitfalls, due to the very nature of the risks exposed.

• The switch from one type of mobility to another depends on volatile patterns, such as the prevalence of public transport in a given city or part of a conurbation, existing alternative forms of mobility, the impact of weather and daily or seasonal peaks on the preference for means of transport, moral hazard in the use of means of locomotion, etc. Under these conditions, it is difficult for actuaries to model risk.
• The data linked to these different forms of mobility is distributed among different operators; they would have to be willing to share it, and insurers would have to be able to capture and analyze it. Not to mention the regulatory obstacles that the use of this personal data may pose.
• As alternative forms of mobility are most often billed on a pay-per-use basis, insurers need to align their pricing methods. CapGemini published a study in 2023 indicating that only 29% of the insurers they surveyed felt able to develop products adapted to new mobilities, and just 16% had the talents to do so.

Next come the challenges posed by the business model for insurers

• The development costs of unbridled multimodal insurance are disproportionate to the youth and size of the potential market. Hence the current vertical solutions, which only cover one segment of mobility.
• The stability of the mobility offer can be an issue, as numerous examples show that shared mobility operators can disappear because they are unable to find their business model, when it's not the public authorities who change the rules of the game without warning. Insurers need a stable ecosystem in which to assess risk.
• Obviously, the market for mobility insurance is largely covered by traditional products or by cover, embedded or not, in shared services. We are not in a situation where an obvious protection gap would lead to a flood of specific insurance offers.
• Speaking of business models, we obviously have to reckon with users' willingness to pay for insurance, which brings us to the next point.

Is there a demand for multimodal insurance?

At the outset, potential customers are faced with the challenge of understanding the risk and its need for coverage.

• I've done the test for myself: With ride-hailing services, where passenger injuries are covered by the driver's professional liability insurance; my shared bike subscription, where there is no personal injury or liability insurance included; and e-bike or e-scooter platforms, where insurance can be embedded, I need to put forth significant effort to understand what is and isn't covered.
• Empirically, I think users of mobility services fall into three categories: those who don't even understand that insurance is an issue, those who ask and try to answer (and struggle to make up their minds) and the residual minority of dangerous perverts who will model everything in Excel.
• And when this last category anticipates who to insure with, who to turn to in the event of a claim, depending on the different coverages and providers, I'm afraid the best intentions won't be enough.

And of course, there is the question of value for money.

• For the general public, buying insurance is often associated with an obligation (e.g. motor third-party liability, or MTPL) or a tangible risk (e.g. theft or fire). For an occasional service, it's more difficult to be palpable. "I don't buy insurance to take the bus, so why should I buy it for other occasional transport?"
• Secondly, you have to consider that the cost of this pay-as-you-go insurance is in addition to the insurance paid for by the year. If all insurances were charged per use, we could find an attractive pricing model for users, but that's not the case. Without incentive, it's hard to generate interest.

See also: Embedded Insurance and the Gig Economy

What's the trajectory for multimodal mobility insurance?

Clearly, this famous "mobility of the future," as the title suggests, is not yet here.

• McKinsey has evaluated the revenues of global mobility to 2030, and its message is clear, even if the figures must be taken with a grain of salt: Ride-hailing mobility will drive future mobility revenue (from $120 billion in 2019 to $450 billion in 2030), while micro-mobility would be at $50 billion in 2030). While these projections are based on the rise of robo-taxis and robo-shuttles, micro-mobility remains a niche market.
• With the digitization of cities, we're hearing more and more about multimodal mobility platforms (mobility-as-a-service). To date, however, this remains a little-implemented concept. Whatever assumptions are made about their development, public transport will remain the backbone of mobility. In this scenario, one question will guide future developments: Do public operators have the will to federate alternative forms of mobility and thus promote competition and its procession of despicable startups?
• In fact, public operators that deploy digital platforms dedicated to mobility are opening up to third-party services to a greater or lesser extent and are facing stiff competition from technological players such as Uber and Citymapper.

In this context, the opportunity for insurers is not necessarily where we think it is.

• CapGemini estimates that, by 2030, the individual car insurance market will only experience organic growth, whereas insurance for alternative forms of mobility (electric, connected, autonomous, shared) should increase eight-fold and reach 40% of the total volume.
• This growth in insurable volume will be driven by coverage for fleets (including leasing contracts), product liability (autonomous vehicles), professional liability (ride-hailing services) and embedded insurance (micro-mobility, hailed mobility).

This brings us back to my initial observations on the state of the insurance offer for multimodal mobility.

• B2C opportunities are likely to be fairly limited, essentially linked to micro-mobility.
• It is with mobility-as-a-service platforms -- i.e., around a single orchestrator carrying embedded insurance -- that true insurance for multimodal mobility has the best chance of developing.
• Before such platforms expand, an entry strategy would be to partner up with shared mobility operators, via embedded insurance, a subject already tackled by certain players, both traditional and insurtech.
• When the multimodal mobility market really takes off, insurers that are already in the market will benefit from their experience, particularly in the use of data. Perhaps this will enable them to respond to some of the insurance challenges mentioned above. But when? All bets are off!

In my opinion, the prospects for multimodal mobility insurance show a complementary dynamic to the one I've already mentioned, which means that the distribution of car insurance will -- in time -- increasingly escape traditional distributors.