Next Generation Insurance: Leading from the front.

This is very good topic and thought. If we want to draw a parallel it is something like pay per view in case of digital cable.

Other point that is mentioned about community cars is indeed something to think about in view of this demanding economy and when consumer is very cautious about spending each penny. Insurance industry will have to come up with differnt personal products. while talking about pay per use or community cars, one industry that probably can be an option is Rental car business. A consumer pays for insurance when he or she rents a car. Rental car business may be a next thing that be an option for people to reduce the expenditure on insurance. Insurance industry may come up with variety of products suitable to rental car business.

Ninor Points:

1. The demographic regarding teen license holders may be misleading. While true, it may reflect stricter licensing proceedures which may be delaying but not obviating the need and eventually purchase of a license.
2. Th cost of insurance creates elasticity in the aggregate demand curtve for Auto licenses, as well, one being the pre-requisite of the other. 3. Scarcity and extreeme cost have tainted the buying decision and has tended to make younger drivers delay entry into the ranks of licensed drivers.

As with most topics in this industry, it is a multivariate analysis, and the industry will adapt to the changing demographics, economics, social behaviors, albeit slowly.
There are already movements in several of the EU countries, utilizing a telematics type of product in a vehicle, to adjust product coverage costs based on a vehicle being driven being a greater risk activity than being parked/garaged.
As with any product, insurance companies look backward at experience to price as well as the law of large numbers. This will evolve as the industry continues to experiment and expand while developing a better set of pricing data.
In the US, there are several companies, AllState being one, that is experimenting with this concept on a defined state basis, with a subset of drivers.

As respects licensing and insurance costs, one can see a movement from standard coverage limits, to state jurisdiction minimums (usually the class of drivers known as sub-standard). Loss ratio's are improving in these carriers, as good drivers are moving into this space because the 1.-are trying to reduce costs and still comply with statutory requirements, given economic circumstances and 2.- The impact of foreclosures and job loss on credit scores which "push" good drivers out of standard markets. Families with teens can no longer afford putting them on the policy.
As respects teenage drivers, for companies they are always the highest risk class, and pricing is steep purely on age. Any loss increases the cost. The lower number of licensed teens, implies the demographic shifts as noted, social media which is the preferred communication and relationship technology, the lack of employment, even part time in the age bracket (I believe in the US it is the highest unemployed class) with the second being the 21-35 group @ 30+% unemployment.
What is interesting to note is that driver education moved from a scheduled course in High School to a fee based course as school systems cut costs/look for additional revenue, and has become quite expensive. Without Driver Ed., it is nearly impossible in many states for a teen to get a license.
So, there are several excellent points made to date on this blog. The economic, social network technology, slowly shifting demographics, etc., teens are adapting. This is shrinking auto revenue, and companies will create products and adapt, but as usual behind the curve of the market. Progressive as an example is touting "Name your own price" auto policies. Fundamentally, all the technology does is adjust coverage amounts and the number of add on coverages to raise/lower to "your price." A low cost re-use of existing web based rating; not new product.
One 21st Century company "hallmark" will be a company that manages their firm and develops products through increased usage of analytics. Much more granular slices of their existing data and analysis will be needed to win the game. Solving their data issues and new BI engines to extract accurate information from the data to analyze is one of the top challenges. The companies who get good at this will being to emerge as the companies that do well in this time of huge structural socio-economic change in the US. The drag on the rate of change even for the best of the "analytical" companies and first movers will continue to be regulation; different in all 50 states and operating in a 19th or 20th century model.