Telematics gets a new lease on Life with AI and Autonomous Vehicles
Insurance companies have tested the use of telematics in the past without achieving widespread adoption. There are many reasons for this, but with the introduction of AI and autonomous vehicles, telematics may experience a renaissance.
A journey from point A to point B can involve several different risk assessments and corresponding tariffs. For example, a single trip may consist of segments where the vehicle operates in autonomous mode, as well as segments where the driver is in manual control. Upon arrival, the journey therefore represents a combination of different risk assessment bases. One assessment will be performed for segments driven in autonomous mode, and another for segments driven manually.
Insurance premiums must therefore be adjusted based on usage:
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Driving in manual mode results in a higher premium due to the increased risk of human error and potential damage.
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Driving in autonomous mode leads to a lower premium, as the likelihood of human error is reduced; however, risk shifts toward potential system failures (and liability may rest with an external party).
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As a result, the vehicle owner or user receives a dynamic premium based on which driving mode is used during the journey.
Insurance companies may experience reduced premium revenues as the use of autonomous mode increases. Autonomous driving is expected to result in fewer accidents, a safer traffic system, and improved sustainability through reduced accident rates.
At the same time, the distribution of risk will change. Risk associated with manual driving may continue to lie with insurance companies, while risk linked to autonomous driving may no longer be handled by insurers, but instead transferred to software providers or other third parties.
One possible consequence is that during a single journey from A to B, the driver may face varying prices and even different insurance providers per kilometre.
When insurance moves from reactive to proactive
AI enables entirely new capabilities to be embedded directly into insurance products. This is driven by increased use of APIs toward third parties and the exchange of real‑time data, which AI can leverage in new ways to create customer‑centric value propositions.
A practical example is the integration of information about delayed luggage during air travel with the automatic payout of compensation for baggage delays. By using APIs connected to airlines and leveraging real‑time flight and delay data, insurance companies will be able to issue compensation immediately when the customer lands, before the customer even realises that their luggage has been delayed.
Imagine the following scenario: A person steps off a plane at a busy airport, shoulders tired, hand luggage hanging from one arm. They glance down at their phone and receive a message:
“Hi! Unfortunately, your luggage is still in Norway, but the insurance compensation has already been transferred to your account. Have a nice day!
Exit the terminal and take a taxi from stand 5 directly to the shopping center to buy new clothes. We have already booked the taxi for you. Please provide reference code A‑1234 to the driver.”
The person looks surprised, then smiles—confident that everything has been taken care of, and relieved of both the disappointment of missing luggage and the administrative burden of filing claims with both the airline and the insurance company.
The result of this technological development is a new and more positive customer experience, where customers receive help quickly and efficiently. Efficiency increases as claims handling time is significantly reduced, and customers experience stronger loyalty toward the insurance company. In addition, dialogue between customer and insurer is strengthened, allowing insurers to maintain close relationships with their customers even as automation takes over parts of the process.
Will AI lead to new and changed insurance distribution models?
Traditionally, insurance in the Nordic countries has been distributed through a strong focus on omnichannel strategies, allowing customers to purchase and manage their insurance both digitally and through physical touchpoints such as offices and advisors. This broad approach has enabled insurance companies to meet customers where they are, online, by phone, or face‑to‑face, while also building trust and long‑term customer relationships.
At the same time, the Nordic insurance market has been characterised by direct distribution, with insurers themselves handling sales and customer follow‑up. This has been important for maintaining close customer relationships and direct communication, making it easier to understand customer needs and tailor products accordingly. By controlling the entire customer journey, from first contact to claims settlement, insurers have ensured quality, service, and loyalty.
This traditional model is now being challenged by technological change, new market entrants, and the increasing use of digital platforms that alter how customers search for information and purchase insurance. Nevertheless, the ability of Nordic insurers to build strong relationships and deliver personalised services remains a key competitive advantage in the market of the future.
Price comparison portals, or so‑called aggregators, have historically had a limited impact in the Nordic insurance market, particularly in Norway and Denmark. This is often due to insurers’ strong focus on direct distribution, close customer relationships, and the desire to control the entire customer journey from sales to claims handling. Many insurers have therefore deliberately chosen to stay off such platforms to protect their brand, ensure personal service, and build trust over time.
However, digital platforms such as ChatGPT, Copilot, Perplexity, and similar services now represent potential shifts in this strategy. The use of AI‑based services has already changed customer behaviour, as these platforms increasingly serve as the “first stop” for information. Customers use AI tools to identify which products best suit their needs, and the path from recommendation to purchase directly on the platform is short.
As this development continues, customers may even build their own agents that continuously assess which insurance providers offer the best terms or prices, and automatically switch on the customer’s behalf, within existing regulatory frameworks. This challenges traditional entry barriers and may reshape the competitive landscape of the insurance industry, where technology companies and AI platforms play an increasingly important role in both distribution and customer interaction.
Automatic transfer of insurance policies is regulated by several frameworks:
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The Insurance Contracts Act (FAL) defines rules for notice periods, customer information, and the execution of insurance switches.
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GDPR ensures that customers’ personal data is processed lawfully, securely, and with consent when transferred between providers.
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PSD2 enables secure sharing of financial data and creates opportunities for third‑party actors; similar principles can be applied to insurance to ensure secure, consent‑based data flows for automated switching.
Insurance advisory without human intermediaries
Imagine a young family of three, two adults and one child, who have just purchased a brand‑new station wagon. They stand smiling beside the car outside their home, the trunk open and a picnic basket ready. On the vehicle’s dashboard, the family’s tablet lights up with an overview of their insurance status: “Your insurance has been updated—you now have the best terms in the market!”
The family has chosen to use a digital agent powered by artificial intelligence, which automatically checks prices and terms from selected insurance providers twice a year. The agent switches to the best available offer on their behalf, allowing the family to spend their time on what truly matters, such as weekend hikes or visits to grandparents, without worrying about overpaying for insurance. They have full control over their expenses and can trust that they always have the most favourable coverage without doing the work themselves.
For insurance companies, this development represents a major disruption, particularly in terms of customer relationships. As AI agents increasingly act as intermediaries, insurers risk losing the close and personal contact they previously had with customers. This can weaken loyalty and make it more difficult to build lasting relationships, as customers increasingly interact with technology rather than people.
In addition, insurance companies must adapt to a new reality in which their products, website content, and distribution channels must be structured in ways that make them attractive and easily accessible to AI agents, or risk losing business. This requires clear and standardised information, seamless digital integration, and continuous content updates so that agents can easily retrieve relevant data and present it to customers. As a result, the ability to be visible and competitive in AI‑driven searches and comparisons becomes crucial for maintaining a strong market position.
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