As a resident of NYC, I do not own a car, or carry personal auto insurance. When I am at an airport and rent a car, I always take full coverage. The customer service rep is always surprised that I purchase all of the insurance coverage. While a personal auto policy would cover some of the damages incurred in case of an emergency, as someone without coverage that would not apply to me. Better to be safe than sorry, and purchasing insurance provides peace of mind and the potential ease on my wallet.

Auto insurance transactions take place with a different mindset than when someone researches and purchases life, health or homeowner’s coverage. As our economy becomes more on-demand, the auto insurance industry should be preparing for a major change. Within 25 years, the private passenger automobile insurance industry will shrink by as much as 60 percent, according to a report by the consulting firm KPMG. This is a direct result of our cars becoming driverless and fewer drivers on the road. This is a critical time for auto carriers, as usage, options and needs are changing.

In the past, as soon as an individual turned legal driving age, they took their driver’s license test and dreamed of owning a car, which would have resulted in owning an auto insurance policy. This mindset has changed with the Millennial generation. Currently, 80% of Americans ages 20-24 years old have a driver’s license, compared to 90% fifteen years ago.

The Millennial generation is the largest generation to date. As this generation changes their behavior and consume goods and services differently, traditional industries need to change. With fewer drivers on the road, there will be less of a need to purchase auto insurance. Auto insurance, with its 6 month terms, should consider short term options. These options could include pay-as-you go / usage based coverage. Paying by the mile, or for a set period of time, may be a more suitable option for those who can chose from services such as Uber or Lyft to get around town instead of driving their own cars.

Auto insurance has traditionally been the first exposure in the consumers insurance buying life cycle. From there, the consumer established a relationship with a carrier or an agent. I believe that this model is changing. With a few taps on any device, consumers can purchase all of their insurance needs from any carrier they choose, when they choose, in the channel they choose. With all of these changes in the way we can purchase insurance, shouldn’t the insurance products we purchase evolve too?

There has been a lot of discussion at insurance conferences on disruption in the industry. Most of the discussion has been on distribution. We should be discussing the changes in the products and their usage too.