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Never miss a perfect storm




Armin Kia

Read time

5 minutes

Never miss a perfect storm

If Oxford Dictionary wanted to add a definition for Perfect Storm, ‘car insurance industry in 2023’ would be the prime example.

Brexit and COVID disturbed the regular insurance cycles by affecting both cost of repair and driving behaviour. The market was trying to digest the post-pandemic inflation when the Ukraine war caused a second wave of inflation, which hit the cost of accidental damages. The result is quite clear: the insurers are struggling to make the ends meet this year.

But could this be a perfect opportunity? 

If the old models don’t work, try new ways 

In times when loss ratios are under pressure across the sector, it’s perhaps the best opportunity to rethink underwriting and pricing practices. The current models in the market can be enhanced in three dimensions: 

  1. More granular demographics pricing enriched by a more extensive use of external databases

  2. More effective use of telematics to understand the customers’ driving habits

  3. Adding road risk and weather data to depict a clearer driving context  

This has been discussed at length in our ‘A new 3-Dimensional approach to assessing driving risk article.

Hence, it comes as no surprise that the insurers with more sophisticated underwriting and pricing practices have been hit less severely than the rest of the market. Full year results during March will be an interesting time to watch the market. 

Surf the waves 

The insurance industry hasn’t been short of market shocks. From Ogden rate changes to GIPP and other regulatory announcements, from Brexit to COVID and Ukraine war, the sector has experienced ad-hoc but fairly frequent tidal waves. 

Now the question is why these market shocks affect the whole year’s results? The answer is in the good old annual structure of motor insurance policies. For almost all car insurers, written premium is committed for a whole year, while the cost may fluctuate during the term based on market conditions. This massively affects the loss ratio and profitability. 

At Driverly, we find the solution in monthly subscription policies. In this structure, the policy term is monthly, and thus the price can be adjusted for the whole book on a monthly basis. This means great pricing agility, especially in turbulent times. 

Be proactive

Traditionally insurers have been reactive to accidents. In other words, the historical job of insurers has been financial protection of drivers at the time of accidents. Perhaps the current market challenges suggest that it’s time to adopt a broader definition of customer protection.


At Driverly, we believe that the best way to protect the customers’ health and wellbeing, as well as the underwriters’ balance sheets, is a proactive approach to prevent accidents. From providing driving scores and personalised feedback to incentivising safe driving behaviour, we believe that our job starts way before an accident takes place. 

Grow when others shrink

It may sound counter-intuitive, but if you get underwriting and pricing right, bullish markets like this are the best opportunity to grow. The car insurance premium rose by 19%, and the trend has just started. This means that customers, who are typically content to stay with one insurer and hope never to deal with them, have a clear incentive to shop around to find the best price. This can be a golden opportunity for young brands to win new customers, especially through aggregators and other online channels. Furthermore, cost of living crisis has made households much more price sensitive, meaning that new brands can win customers’ hearts and minds with the right price. 

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