Automotive technology personalizes the insurance experience

One of the biggest disruptions in the insurance industry is the move towards in-vehicle data collection by original equipment manufacturers. (Photo: Shutterstock)

Today’s hyper-connected cars not only offer amenities like internet access, in-flight entertainment, and turn-by-turn navigation for drivers and passengers, but they offer a wealth of data that radically reshapes the auto insurance landscape. As technology improves and driving data becomes more precise, usage-based insurance policies (UBI) are gaining in popularity.

The move away from third-party devices in favor of integrated telematics means that the vehicles themselves – both personal and business – become the data conduits to the insurer, providing benefits to policyholders and insurers.

Technology produces better data

One of the biggest recent disruptions in the insurance industry is the move towards in-vehicle data collection by original equipment manufacturers (OEMs), who recognize a potential opportunity to monetize data. valuable to consumers. Over time, third-party devices that plug into a car’s diagnostic board are replaced with cheaper and more convenient smartphone-based solutions, which will soon give way to technology built right into the vehicle. This integrated technology provides better and more accurate data, a wealth of potential information.

Until recently, this valuable data was only widely used by personal insurers. But the massive evolution of telematics now allows insurers to use it for commercial lines – for claims, FNOL and fraud detection. Additionally, companies like Progressive are using telematics to support electronic recording (ELD) of driving data for small interstate fleets, as well as to track vehicle travel radius and time of day driving. . This, in addition to using driving scores to provide commercial drivers with real-time data, encourages them to improve their driving, which can reduce risky driving events by up to 55% according to a department study. American Transportation.

OEMs, insurers, and related industries all need to carefully navigate state-by-state and country-by-country privacy laws to determine what personal driver information they can track and how long they can store the information. data, but P&C insurers are well positioned. to deliver real customer value and drive growth with UBI.

UBI telematics compatible

Applied to auto insurance, telematics can be as simple as tracking the number of miles traveled by an insured or as advanced as tracking behavior – such as driving events such as hard braking and turns, number intersections that a driver typically crosses in a given amount of time and even what time of day they travel the most.

While data privacy remains a sensitive issue, UBI has clear benefits for policyholders and insurers as data becomes more robust and available in real time. The main benefits for policyholders are safety, convenience and cost savings.

For example, in the event of an accident, telematics sensors can instantly notify a customer’s insurance company, while simultaneously sending assistance and emergency vehicles to the crash site as quickly as possible. Because telematics collects very detailed information, insurers can also connect with policyholders immediately after an accident, pushing links or apps to their smartphones so they can capture photos or videos of their vehicle.

For insurers, UBI telematics also helps paint an accurate picture of what happened in an accident, which helps prevent fraud. In the event of an accident, it allows a better estimate of the damage and speeds up the claims process. Insurers can take data from a vehicle that shows the precise angle at which the car was struck and with how many g-forces, then use that information to quickly calculate what the payout should be. As a result, insurers can often pay claims within hours of an accident.

Another key benefit of UBI is pricing. Using behavioral data of individual drivers against generic demographic information, UBI closely aligns driving behavior with premium rates. In this way, telematics allows insurers to more accurately assess risks for individual drivers – and incentivize them with data-driven safe driver discounts. In the fleet world, underwriting is enhanced by tracking garage location and vehicle travel radius as well as driving hours per day and time of day driving.

UBI based on platforms and telematics

Going forward, platforms that capture OEM data and provide driving scores and FNOL information to the insurer will have a profound impact on insurers. The cost of accessing driving information, which until recently required expensive on-board diagnostics, will be replaced by much more cost-effective capture methods. One of the applications of this evolving technology is the ability to underwrite new policies based on historical driving information.

Telematics has the potential to transform the way auto and personal fleet insurance is bought, sold and administered. By removing costs from the claims process and matching premiums to risk more accurately, insurers can lower their cost and underwriting ratios – and policyholders can benefit from lower rates, improved customer service and safer driving experiences.

Tim Kennedy ([email protected]) is a Business Line and IoT business owner at Guidewire Software.

Related:

Looking to the future of claims

Demystifying the use of AI in the insurance industry


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Deana N. Guinn

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