# Keynote Report: When the Vehicle Changes, the Risk Changes. The Automotive Warranty Business Must Change With It.
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A look inside a customized executive foresight briefing for iA Financial Group – Automotive, and what the reinvention of the automobile means for the future of warranty, protection, risk and customer relationships. A central strategic challenge for the automotive warranty and protection industry: what happens when the vehicle itself is reinvented? What business are you really in when the product at the centre of your business is being fundamentally reinvented? That was the question behind a private CEO-level session I developed for approximately 15 senior leaders from iA Financial Group – Automotive. This wasn't a broad presentation about electric vehicles or the latest developments in artificial intelligence. The assignment was considerably more specific: look out over the 2025–2040 horizon and examine what happens to the economics, assumptions and opportunities of automotive warranty and protection services when the automobile itself changes. Consider how much of the traditional warranty and protection business is rooted in experience with a familiar machine. We know what tends to wear out, what a transmission repair might cost, how dealers deliver protection products, how claims are administered, and how historical loss experience informs underwriting. A substantial industry has developed around those assumptions. But vehicles are becoming software platforms, electrified powertrains introduce new risk profiles, manufacturers are expanding their direct relationships with drivers, and connected vehicles create an entirely new stream of diagnostic information. The result is not one disruptive trend. It is a collision of changes to risk, revenue and relationships. From the iA Financial Group – Automotive case study: a tailored executive briefing on the 2025–2040 future of warranty and protection services. View the original keynote case study. The strategic point I put forward was straightforward: When the vehicle changes, the risk changes. When the risk changes, the warranty and protection business must change with it. Three tectonic shifts, not one technological upgrade The first step was to look beyond the popular narrative that the future of the car is simply an electric motor replacing an internal-combustion engine. In the keynote, I framed three simultaneous tectonic shifts: mechanical to software-defined vehicles, franchise to agency and direct-sales models, and the growing influence of Chinese automotive manufacturers on technology, price and warranty expectations. From the keynote: three converging shifts redefine risk, revenue and the customer relationship. Each shift has consequences. Together they challenge the foundations of warranty design. If software increasingly determines how a vehicle works, does an existing mechanical-breakdown contract still describe the kinds of failures consumers will experience? If the manufacturer controls the sale and the vehicle's data, who will own the customer relationship? If new entrants establish different warranty terms and service economics, can the established business continue pricing and distributing protection products as before? These are strategic questions, not simply technology questions. To illustrate them, I worked through a series of very specific problems. 1. What happens when a car becomes software? One of the most profound changes is that vehicles are becoming software-defined. A growing range of functions can be controlled, modified and sometimes repaired through software. Updates can arrive remotely. Diagnostics increasingly happen continuously. A vehicle may experience degraded performance because of software behaviour, not because a physical component has broken. Keynote: software-defined vehicles change the nature of failure, service and product risk. Supporting illustration: vehicle architecture increasingly combines physical systems and software-defined functions. Think about what that means for an industry built around the concept of mechanical failure. Historically, a part failed, a technician diagnosed the problem, and a repair or replacement followed. In a software-defined world, the remedy might instead be a remote update, a new calibration or a software fix. There might be no broken part at all, yet the owner still has a vehicle that does not function as expected. That creates difficult questions about liability, coverage boundaries, exclusions and the very definition of a claim. Who is responsible when an update introduces a problem? What happens when a required update hasn't been installed? What if physical hardware outlasts the software that supports it? Keynote: the boundary between a hardware failure and a software failure is dissolving. The answer cannot simply be to attach yesterday's contract to tomorrow's vehicle. In the keynote, I proposed that the industry needs to think beyond traditional mechanical breakdown toward concepts such as digital uptime and technological resilience. Those are strategic directions to explore, not claims that today's contracts already provide such coverage. 2. What happens when the manufacturer owns the data? A connected automobile is more than a product; it is also an ongoing source of information about its condition, operation and use. That opens remarkable possibilities for predicting faults, identifying abnormal behaviour, detecting deterioration and anticipating maintenance needs before a breakdown occurs. But it also raises an uncomfortable competitive question: who gets access to that information? Keynote: the OEM data moat, and why control of connectivity can reshape competitive advantage. Supporting illustration: the connected vehicle can become an information platform as well as a means of transportation. A warranty administrator relying primarily on historical claims may be making decisions with a very different information set from a manufacturer with real-time telematics and diagnostic access. This is not simply an analytics problem. It potentially becomes an underwriting, pricing, customer-service and competitive-survival problem. For leaders, the question becomes whether they can establish valuable data-sharing relationships, build services around predictive insight, and find a new role in an ecosystem in which the manufacturer may increasingly control both the product and the digital relationship with its owner. 3. What happens when there is no longer one kind of powertrain risk? For decades, warranty pricing could draw on extensive experience with internal-combustion platforms. That historical knowledge remains useful, but the market is becoming a mosaic of gasoline vehicles, mild and full hybrids, plug-in hybrids, battery-electric vehicles and potentially other powertrain configurations. These are not equivalent risk classes. Keynote: six distinct powertrain categories complicate underwriting, coverage and repair economics. Supporting illustration: powertrain diversity adds complexity to repair costs and warranty assumptions. Electric vehicles can have fewer routine mechanical maintenance demands while still presenting high-cost battery and electronic-component exposures. Hybrids combine mechanical and electric systems, potentially creating complex repair pathways. Aging batteries introduce questions about degradation, replacement cost, residual value and the availability of sufficient long-term claims experience. My goal in the briefing wasn't to declare a single technology the inevitable winner. It was to challenge the belief that a warranty framework developed for one kind of vehicle can be applied unchanged across an increasingly fragmented market. If the underlying risk is no longer uniform, why should the protection product be? 4. What happens when the dealership is no longer the centre of the relationship? For many traditional providers, the economics of warranty and protection have been intertwined with dealership processes and the finance-and-insurance office. But agency distribution, direct-to-consumer brands and digital purchasing are changing who controls the point of sale, pricing, communication and after-sales relationship. Keynote: agency and direct-to-consumer distribution can loosen the traditional dealer finance-and-insurance relationship. That creates a disintermediation challenge. If the vehicle maker owns the app, customer account, service connection and ongoing product offers, third-party protection businesses need a proposition that goes beyond being available at the dealer's desk when the vehicle is sold. This is where the conversation becomes especially interesting. Perhaps protection becomes more modular, subscription-based or embedded into a broader mobility service. Perhaps products are delivered after the initial vehicle purchase or follow a fleet rather than an individual retail transaction. These aren't guaranteed outcomes, but they are precisely the kinds of possibilities that strategic planning must test. Keynote: the proposed omnichannel mobility wallet imagines protection following the consumer rather than being tied solely to one vehicle. The mobility-wallet concept in the briefing was a useful thought experiment: what might happen if protection followed a consumer across changing vehicles and modes of access? A business built on a one-time vehicle sale would have to rethink how it earns recurring relevance. From repair reimbursement to anticipating the problem One of the more promising changes is the potential to move from a reactive claims model toward more predictive vehicle protection. When data can reveal developing problems earlier, a protection provider might be able to reduce avoidable failures, improve the customer experience and change the economic relationship between service and risk. Of course, prediction is not magic. Data quality, access, privacy, technical feasibility, contractual responsibilities and the economics of intervention all matter. Yet the strategic possibility is important: rather than selling only a financial response after something breaks, a provider might increasingly help keep a vehicle working in the first place. Four questions every automotive protection leader should be asking I concluded the deeper analysis with four strategic questions. They are particularly useful because they move the discussion away from general predictions and toward decisions about products, partnerships and operating models. Who owns the relationship? If manufacturers increasingly control distribution and the digital customer experience, what value can an independent warranty and protection company provide? How is failure defined? If a vehicle can be unusable because of a software fault rather than a broken component, where do current coverage boundaries make sense and where must they evolve? Can providers survive without data? If some participants have live vehicle insight while others have only historic claims, how can the latter compete intelligently on risk? Is the industry ready for B2B? How might protection economics change if fleets, subscriptions and commercial mobility services become more significant parts of the market? Keynote: redefining failure, from physical breakdown to software and digital uptime. Supporting illustration: in a software-defined vehicle, a system can fail even when no mechanical part breaks. Every industry needs to ask its own version of these questions. And that is one of the most interesting things about the work I do. Preparing for an executive briefing in automotive protection requires a very different research agenda from preparing for a utility leadership summit, an electronics-industry conference or a governance and risk audience. The broad patterns of acceleration may be similar, but the business consequences are highly specific. For this iA Financial Group session, that meant going well beyond the usual headlines about electric cars to examine policy design, underwriting, data access, distribution, repair economics, emerging competitors and the long-term shape of customer relationships. The purpose of that kind of customized strategic foresight is not to hand executives a supposedly perfect prediction of 2040. It is to help them see which assumptions deserve to be challenged today. The core lesson extends well beyond automotive warranty and protection. We often assume that when the product changes, the businesses surrounding it will adjust naturally. But business models can outlive the conditions that originally made them successful. Experience, historical data and established processes are valuable only if they continue to describe the world in which decisions must now be made. That is the comprehension challenge. You cannot make sound decisions about a reinvented product using an unchanged understanding of the business built around it. The warranty business cannot remain mechanical in a software-defined automotive world. And that's why I return to the same conclusion: When the vehicle changes, the risk changes. When the risk changes, the warranty and protection business must change with it. For more detail on the original executive briefing, including its sector-specific trends, see my iA Financial Group – Automotive keynote case study.

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Source: https://jimcarroll.com/2026/10/keynote-report-when-the-vehicle-changes-the-risk-changes-the-automotive-warranty-business-must-change-with-it/