Tag Archives: auto insurance

Tipping Point for Claims Automation

This year, we have witnessed explosive growth in technology adoption. Zoom video conferencing has risen 574%, Instacart grocery delivery has jumped 450% and Google Classroom usage has increased 580%—all due to COVID-19. The pandemic has truly altered how we think about and use technology. For businesses, it has introduced opportunities for digital transformation. Case in point: the automotive insurance industry.

While some may say insurers are slower to embrace change, the sector has moved at lightning speed to maintain business continuity since the start of COVID-19. The first step was what seemed like an overnight transition to a fully remote workforce. After setting up the required technology to support their employees, carriers then shifted focus to refining the digital solutions that would allow them to better manage the claims process and serve their customers virtually.

Automotive insurers have long relied on staff appraisers and collision repairers to assess vehicle damage after an accident. While virtual estimating—or using photos in place of a physical inspection—is not new, the pandemic has made it the preferred method of inspection.  

Prior to COVID-19, use of virtual estimating was limited and focused almost exclusively on low-severity claims. This was due, in part, to concerns about the ability to produce an accurate estimate. In fact, when compared with other methods of inspection, virtual estimating accounted for just 2% of all estimates written in the United States and Canada just a year ago. 

However, with an increase in our need to socially distance and a decrease in miles driven, the conditions were right for widespread adoption of claims virtualization. In just the first two months of the pandemic, virtual estimating usage jumped to 13%—all while growth in other methods of inspection has decreased or remained stagnant. In addition, some carriers announced early in the outbreak that they were moving almost all of their claims handling to a virtual model, and dozens more reached out to Mitchell to get started. Collision repair shops have also followed suit, providing customers with new tools for collecting and submitting damage photos.

See also: Future of Claims: Automation, Empathy

For insurers, the benefits of virtual estimating include increased efficiency and customer satisfaction. Field appraisers typically complete three to four estimates a day when factoring in administrative tasks and drive time. However, with virtual estimating, that number increases to 15 to 20. By eliminating travel and tasks like appointment setting, employees can focus their efforts on the actual appraisal. Consumers, on the other hand, benefit from the speed, ease and convenience that comes from a digital self-service solution—at a time when technology adoption has never been higher. 

So what impact does this have on claims automation? The first step toward automating the claims workflow was increasing insurers’ comfort level with using photos, instead of a physical inspection, to assess vehicle damage. With COVID-19 accelerating their adoption of virtual or photo-based estimating, we have now reached a tipping point. Insurers have validated the feasibility of using photos in the estimating process. They have seen virtual estimating used successfully for both low- and high-severity claims. And they can no longer dispute the efficiency gains and consumer benefits it provides. These factors combined may make them willing, and ready, to begin automating the complex, labor-intensive claims process. 

The natural next step is to use artificial intelligence (AI) to further streamline and improve estimating. With the photos—and eventually videos—submitted digitally, insurers can rely on an AI engine to identify component-level vehicle damage. From there, the data can be combined with other inputs to return a recommendation of either repair or replace. If repairable, the computer can then populate individual estimate lines with recommended parts and labor costs. Once the data is submitted, carriers can even incorporate automation in the auditing process. Instead of reviewing just a handful of estimates each day, auditors can let the computer review all of the estimates submitted. This will allow them to focus their energy on the claims that need attention. It will also give them the opportunity to rapidly uncover and address any issues.

Leveraging automation in the claims process has many benefits, as noted by McKinsey. First, it improves accuracy. Next, it increases efficiency, reducing expenses by 25% to 30%. Finally, it raises customer satisfaction by as much as 20%.

See also: Keys to ‘Intelligent Automation’

Over the last three months, insurers have taken an incremental step—or leap—closer to claims automation. However, the transition from virtual estimating to touchless claims will not happen overnight. It is an evolution that will require us to re-think how and where we use technology versus how and where humans apply their expertise. In the end, though, automating more of the claims process will allow us to better serve consumers and support the proper, safe repair of their vehicles.

5 Trends Changing Auto Insurance

Nearly every time you turn on a light switch today, you are witnessing the power of trends upon shifting markets. Though lighting isn’t going away, the types of bulbs we use and their supply chain has been in flux for the past two decades.

On May 27, 2020, General Electric stopped making light bulbs entirely (after 130 years), selling its lighting division to smart home company Savant Systems. All of the other major lighting players have also been negotiating a market and industry in the midst of change. Government mandates for lower energy bulbs have removed most incandescent bulb manufacturing operations from the market. LED bulbs not only use much less energy, but the bulbs last far longer — so the sales of bulbs will drop over time.

Philips Lighting, another stalwart industry player (125 years old), decided that instead of leaving the business it would develop Philips Hue, a connected lighting solution. Smart homes have now given rise to smart lighting, including smart bulbs — digitally driven bulbs that can adapt themselves to the experience that a customer wants. Many can be controlled via home networks and mobile phone apps. Philips also chose to spin off a whole new brand, Signify, that would embrace sustainability and energy-efficient lighting.

Auto insurers are going to have choices like this to make. Auto insurance, coincidentally, is also a 120-year-old “established” industry, based around a policy transaction. Will insurers continue to provide traditional insurance in traditional ways until they are forced down a dead-end path, or will they embrace new trends, new technologies, new services and perhaps a new mobility ecosystem approach? Will they reinvent themselves to become next-gen mobility customer experience providers?

In Majesco’s most recent thought leadership report, “Rethinking Auto Insurance: From a Transactional Relationship to a Mobility Customer Experience,” we use customer primary research and recent trend data from other sources to answer two pertinent questions:

  • What are the trends pushing auto insurers to adapt their business models?
  • Why should auto insurers begin creating mobility ecosystems and customer experiences that will transform their purpose and their profits?

We consider five trending points that are driving change, including:

  • The Auto Insurance Buyer – A Shifting Demographic
  • Vehicle Technologies
  • New Data Sources
  • Ownership vs. On-Demand Mobility
  • New Auto Insurance Sources and Providers

Let’s briefly consider these trends and how they may affect auto insurers.

Trend 1: The Auto Insurance Buyer

For purposes of simplifying analysis within the Mobility Survey, we created two generational “super segments” by combining two different age groups, Gen Z and millennials and Gen X and Boomers. As expected, the Gen X and Boomer segment is more active than their younger peers in buying or influencing purchases of household services, insurance and financial products. Three exceptions were in individual life insurance and voluntary benefits, where the segments purchased at equal rates, and Amazon account usage, where Gen Z and millennials have a slight lead.

The older super segment has sizable leads in personal lines P&C insurance (auto and home/renters), employee benefit health insurance, investments and annuities. All of these products are good fits for the 30- to 60-year-old “sweet spot” for insurance and financial products, given they are at a life stage with the greatest insurance and financial planning needs as they establish households and families and accumulate wealth and possessions that need protection.

See also: The End of Auto Insurance  

In 2021 – one year away – millennials, all by themselves, will meet and begin to surpass the older super segment. The young super segment’s dominance will accelerate four years later when the first members of the Gen Z generation also turn 30, vaulting this new generation to buying dominance. Providers of household services, insurance and financial products that have not adjusted their business models, products and customer engagement experiences to meet the needs of this new “sweet spot” buyer market will find themselves challenged and left behind.

The insurance industry will need to adapt to this new super segment of new customers.

Figure 1: Insurance buyer “Sweet Spot” populations by generation in 2000 vs. 2020

Trend 2: Advanced Technologies for Vehicle Safety

Nearly 60% of Gen Z and millennials and half of Gen X and Boomers who own or lease a car have at least one type of newer safety or convenience technology in their vehicle. Navigation systems and blind spot detection are the most popular among both segments. The Gen Z and millennial vehicles have higher rates of collision avoidance systems, surround view systems, automatic braking and automatic parking.

These technologies were expected to depress auto insurance premiums thanks to fewer accidents.  However, insurers’ experience to date has not matched this expectation. The cost of repairing or replacing these more sophisticated vehicles with advanced technologies is greater than the savings derived from lower frequency. Some of these technologies have indeed shown benefits, but the translation to lower premiums has been minimal. For example, NAMIC found that electronic stability control saves a customer an average of only $8 on the annual premium. And, “those who pay for blind spot warning, driver alertness monitoring, lane departure warning, night vision or parking assistance systems save nothing at all.”

Is it possible that eventually the impact of these technologies will overtake the cost of maintenance and repair? In theory, yes. The greater number of high-tech vehicles that are on the road, including the autonomous vehicles of the future, the greater the chance that vehicular accidents will drop. There are, of course, an unknown set of circumstances related to COVID-19 and auto use. Will a significant percentage of the workforce stop commuting? Will public transit commuters begin to use their vehicles to avoid exposure? Or, will technologies such as driverless vehicles create an entirely new commuting scenario?  Lilium, a German aviation startup “unicorn,” has plans for bringing flying taxis to the skies by 2025, which will further change the mobility options. The answers may lie in the rise of mobility ecosystems, which we’ll examine later.

Trend 3: New Data Sources

Connected devices (and other data sources) are enabling underwriting and pricing based on mileage, location and driving behavior, which could lower premiums, while also making them potentially less predictable. Surprisingly, there are very similar levels of interest in these new data sources between the two generational super segments.

The COVID-19 shelter-in-place actions slashed the number of miles driven – by an estimated 50% between mid-March and mid-April. This is spurring speculation and debate about the pandemic’s longer-term effect on mileage-based or usage-based insurance. Although streets and roads have fewer vehicles on them, numerous states and cities have reported increases in speeding and reckless driving and fewer but more severe accidents. From an insurer perspective, broader usage-based/UBI models would be the preferred approach post-COVID-19, rather than simply tracking miles driven.

Despite the growing acceptance of new data sources, with the potential for variable premium by the month, the traditional six-month term with a set premium is preferred by both generational groups. However, Gen Z and millennials have a higher interest in a usage-based model that is automatically triggered by sensing when the car is parked or being driven.

Within the Gen Z and millennial segment, 28% of respondents indicated they have used a device or app to record their mileage or driving behavior as compared with only 15% of the older super segment. Both generational super segments showed strong interest in a smartphone app that provides real-time alerts and advice about driving behavior and conditions. Interest is even higher if following the advice leads to discounts on the next insurance bill.

Trend 4: Ownership vs. On-Demand Mobility

There is growing popularity and use of non-owned vehicles and alternative mobility options like rideshare, rentals (traditional and shared economy) and other local or urban rental options like scooters and bicycles. With their increased usage comes the threat of an offsetting level of private vehicle ownership and leasing, leading to a declining need for personal auto insurance.  This declining ownership could accelerate if more people work from home, eliminating the need for the traditional “two-car family” and using alternative, on-demand mobility.

All-inclusive vehicle subscription services are a relatively new mobility option offered by several auto manufacturers (currently, most are luxury brands) and third-party services. Most allow the customer to switch vehicles on a periodic basis and pay a set monthly fee that covers the vehicle, maintenance and insurance. A surprisingly high number (30%) of Gen Z and millennials indicate they are using or have used a service like this – nearly four times higher than the older generation, indicating interest in different access to mobility options as compared with “owning” a vehicle. Some of these users likely correlated these experiences with micro-term car-sharing company’s such as Zipcar.

See also: Insurance Innovation — Alive and Kicking  

Nearly 26% of Gen Z and millennials and 20% of Gen X and Boomers indicate they would or definitely would consider a vehicle subscription the next time they go to purchase a vehicle. When you add in the “maybes,” these numbers jump to 71% and 61%, respectively.

Figure 2: Usage of mobility technologies and participation in mobility trends

Gen Z and millennials use car-sharing services more frequently than Gen X and Boomers. Over a third (35%) traveled this way for five or more days in the previous month, compared with only 18% of Gen X and Boomers. Clearly, this is an established mobility preference within the younger generation that will fuel a growing market for on-demand rideshare coverage and indicates, once again, the potential decrease in car ownership by this younger generation. 

Trend 5: New Auto Insurance Sources and Providers

Most of the consumers we surveyed said they still own or lease one or more vehicles. The traditional purchase methods for auto insurance are still the most preferred channels — agents/brokers or direct via an insurer’s website. This is consistent from the last couple of years from our consumer research.

However, Gen Z and millennials also indicate strong interest in insurance embedded in the purchase cost of a vehicle, or buying insurance from a vehicle manufacturer’s website, an affinity group, car dealership, or car shopping website – about 25% higher than the older generation. Interestingly, this group also showed strong interest in purchasing insurance from three of the “tech giants,” Amazon, Google and Facebook – a wake-up call for both insurers and those selling vehicles. For a better glimpse, see Fig. 3 below.

Figure 3: Interest in traditional and new sources of auto insurance

If we look at all five of these trends in aggregate, auto insurers are facing a light bulb moment. Many of these trends will likely accelerate as we reconsider our work lifestyles moving to the home coming out of COVID-19.  If changes are going to occur in demand levels, channel types and service offerings, can auto insurers compensate by bringing the right kind of change to the market? Can they invent their own supply chains of opportunity?

In our next mobility blog, we look at this supply chain in depth. Auto insurers are redefining themselves as mobility companies and in the future will be seeking to own the mobility experience using a vast mobility ecosystem, ideally building those ecosystems around their brands. Those who will lead the mobility shift are the ones who have prepared their business systems and models that will focus on the customer mobility experience and foster non-traditional products and services.

Now is the time to start this conversation within your organization! Use Majesco’s “Rethinking Auto Insurance” report as a kickstart for your internal brainstorming or view the replay of our webinar on the research. 

The End of Auto Insurance

Imagine that you wake up one day in the future and you read this headline:

“Auto insurance is no longer being sold.”

The article says accidents are rare or no longer possible due to autonomous technologies, hundreds of new safety features, an entirely new methodology for handling vehicular risk and a dramatic reduction in the personal ownership of vehicles. When claims events do happen, they are covered by the manufacturer or simply paid for out of a reserve created by a globally pervasive mobility corporation.

If this seems far-fetched, you will want to read Majesco’s latest report, “Rethinking Auto Insurance: From a Transactional Relationship to a Mobility Customer Experience.” Though auto insurance is unlikely to go away any time soon, premiums are beginning to decline and will likely continue to decline in the coming two decades at a rate much faster than many would like to admit is possible. This decline will force auto insurers to reinvent themselves in ways that are both challenging and exciting. It will be the end of auto insurance as we currently know it, but it will be the beginning of mobility experience and ecosystems that could improve insurers’ profits with new revenue sources.

Four years ago, we published our first Future Trends report (with an update to the report in December 2019) that examined a major shift unfolding due to the converging “tectonic plates” of people, technology and market boundary changes disrupting and redefining the world, industries and businesses — including insurance. In particular, these trends are changing traditional auto insurance. Majesco’s new report goes one step further to answer two highly pertinent questions:

  1. What trends are pushing auto insurers to adapt their business models?
  2. Why should auto insurers begin creating mobility experiences and ecosystems that will transform their purpose and their profits?

In today’s blog, we examine the high-level trends that are affecting auto insurers and take a peek into how insurers are likely to adapt and respond. We’ll cover:

  • Customer, Technology and Market Boundary Changes
  • The Generational Shift in How Transportation Is Perceived and Used
  • The Auto Insurance Transaction vs. a Mobility Customer Experience

Customer, Technology and Market Boundary Changes

In February, Uber said that 10% of U.S. millennials who ride with Uber have changed their car ownership behavior. Due to increased costs of vehicle ownership, environmental consciousness, technological innovation and the availability of mobility through Uber, millennials are choosing to get rid of a personal vehicle or choosing not to buy a car.

Because of the customer, technology and market boundary changes, traditional auto insurance is under growing pressure and threat from many fronts, including:

  • The growing use of non-owned vehicles and mobility options like rideshare, rentals (traditional and shared economy) and other local rental options like scooters and bicycles, reducing the market size for individual auto insurance purchases.
  • Non-insurance providers that offer/embed insurance for vehicles and other mobility options, potentially cutting off traditional carriers from these opportunities.
  • Increased effectiveness of safety technology, putting more emphasis on prevention and less on traditional indemnification, potentially depressing auto insurance premiums. It is estimated that advanced driving assistance systems (ADAS) features and enabling technologies increasingly included in new vehicles can reduce losses 20% to 30%.
  • Connected devices that enable improved data, beyond telematics, such as mileage, location, weather-related and driving behavior. This is allowing for real-time, data-based underwriting and pricing, which could lower premium volume or make it less predictable.
  • Auto manufacturers that are leveraging their customer relationships and data to offer insurance, repairs and services (Porsche, Volvo, Tesla, Ford, GM, etc.). They are recasting themselves as “mobility companies.”
  • The rise of on-demand insurance, expected to increase 30% by 2026.
  • The rise in testing and use of self-driving vehicles and robots due to the COVID-19 pandemic for contactless deliveries, which could accelerate a shift to a future of autonomous/semi-autonomous mobility marked by fewer accidents.

See also: Evolving Trends in a Post-Covid-19 World  

The Generational Shift in How Transportation Is Perceived and Used

Adding to the pressure on auto insurers is the shift in generational views on transportation, mobility and product expectations for auto insurance. Within the report, we discuss the shift between millennials and Gen Z versus Gen X and Boomers, including:

  • 28% of the younger generation currently use a device or app to record mileage and driving behavior — compared with 15% for the older generation – nearly a 100% difference.
  • 11% rented someone else’s car through a sharing service, and 9% rented out their car, versus 2% and 1% for the older generation.
  • 30% of the younger generation are using or would use an all-inclusive vehicle subscription service – nearly four times higher than the older generation, indicating interest in different mobility options as opposed to owning a vehicle.
  • 40% of the younger generational segment would pay $10 per month for a mobility solution with access to a wide array of services. Only 20% of the older generation is interested in this — a 100% difference.
  • The younger generation is two times more likely to:
    • buy auto insurance from a car shopping website or a vehicle manufacturer website,
    • have insurance included in the purchase or lease of a vehicle,
    • buy insurance from Amazon or Google.

Auto insurers must reimagine the scope of what they will offer to customers – an experience with a risk product, value-added services that are part of a broader mobility ecosystem and a compelling customer experience. This is where exciting new business opportunities await. And where new competitors are emerging, including automotive companies, ride share companies and others.

The industry status quo for auto insurance is rapidly eroding. Insurance is being re-defined with a growing number of influences, upending decades of business assumptions. In this new decade, a fresh auto insurance opportunity exists for those who will participate in a broader mobility ecosystem and the growing number of insurable situations.

The Auto Insurance Transaction vs. a Mobility Customer Experience

As a result of all of these changes, the greater threat may be auto insurers’ continued 100-plus-year-old view of auto insurance as a policy transaction.

With so much change around transportation options and automotive, companies outside insurance are coalescing around a shift to “mobility.” From the decline in car ownership for the first time since 1960, with 9.1% of households in 2015 having no cars, to the rise of ride-hailing and car-sharing services, a plethora of transportation options continue to expand.

According to a survey from Cox Automotive, nearly 40% agree that having transportation is necessary, but owning a vehicle is not. Most interestingly, among millennials, the rate jumps to 45%, and for Gen Z it jumps to 55%, as reflected in Figure 1. This implies that mobility options are important but can be fulfilled by many means beyond traditional vehicle ownership … a significant shift affecting business models from automotive companies to insurance companies alike.

Figure 1: Importance of vehicle ownership as a mode of transportation

These shifting customer, market boundary and technology trends are creating a new market segment called “mobility” that brings together different elements of other markets or industries, including insurance. Unfortunately, for customers the current experience is fragmented, inconsistent and difficult at best, as they interact with disparate entities to complete necessary tasks across the mobility journey. These would include everything from financing a vehicle, to using and maintaining that vehicle, to selling that vehicle. You could also include transactions such as renting a car, parking a car, purchasing tickets for public transit, using public scooters and bicycles and, of course, maintaining insurance for any of those tasks.

Customers currently have to work with the different parties individually, requiring time and inducing frustration, meaning that customers may reduce, reallocate or eliminate a substantial portion of today’s auto insurance premiums. Insurers must rethink their scope away from an auto insurance transaction to a broader mobility experience that redefines and includes:

  • Insurance Product: Product (risk, services, experience) redefined but requiring insurance to participate and play within ecosystems, rather than simply existing as an ecosystem unto itself.
  • Mobility Policy: One unified policy to cover whatever mode of transportation a customer chooses, instead of separate policies for each.
  • Value Added Services: Risk protection services as a component of an ecosystem that provides a single place for all of the “jobs” a customer needs to get done across the mobility customer journey – providing a powerful, single engagement and eliminating points of friction between the different participants of the ecosystem.
  • Continuous Underwriting: Constantly updating the risk profile of an individual or thing that changes the terms and pricing, influenced by the continuous flow of data from autos, telematics and IoT devices.

Highly networked, data-driven, value-added mobility business models are rapidly emerging, primarily outside of insurance. Automotive companies like Tesla, Ford and GM are leading this shift along with platform companies like Uber. They are redefining the customer journey, and the entire customer relationship, across a broader set of transportation options.

See also: COVID-19’s Once-in-a-Lifetime Opportunity  

These shifts will push auto insurers into new realms of business, expanding their definitions of product and service and making them much more relevant to the daily life and experience of each customer.

In our next blog, we’ll look at real evidence from a recent Majesco survey that confirms the trends we have highlighted above. We’ll look at the specifics of two major demographic groups and what they are looking for in their mobility experiences. We will also look at what they are currently doing regarding mobility and technology versus what changes they are considering for the future.

You can access this information even faster by downloading our latest report, “Rethinking Auto Insurance: From a Transactional Relationship to a Mobility Customer Experience,” or view the replay of our webinar on the research.

Self-Driving Vehicles: A Wake-up Call

How close are self-driving vehicles to truly becoming a reality? The answer depends on who is being asked.

Automotive manufacturers may sheepishly respond with “longer than we proclaimed,” as the initial 2020-2022 predictions give way to timing that is now being held closer to the chest, according to the 2019 J.D. Power Mobility Confidence Index Study. However, this critical—albeit possibly humbling—realization brings to light the intersection of the fantasy vehicles played out on-screen in sci-fi movies and TV shows, and the complexities of the technology necessary to safely maneuver real-world vehicles on public roads in all environmental conditions.

Many consumers who had long dreamed of these fantasy vehicles have since pumped the brakes. Why? Tech failures/errors (71%), risk of vehicle being hacked (57%) and legal liability as a result of a collision (55%) are consumers’ top concerns that were uncovered in the J.D. Power study. As consumers begin to experience first-hand the integral technologies that make self-driving vehicles possible, many believe it will likely be more than a decade before they become a mainstay on public roadways.

Ultimately, one thing both groups agree on is this: Turning dream cars into real cars isn’t simple.

Effects of Real-World Elements on Self-Driving Vehicles

Automakers are put to the test when introducing safety technology in real-world situations. Sure, a vehicle will stop or swerve when it’s supposed to on a closed course, but what about on the road with other vehicles?

Recently, a Tesla Model S crash occurred when the driver had Autopilot engaged and the car hit the back of a fire truck stopped in a high occupancy vehicle (HOV) lane. The safety system is designed to temporarily ignore stationary objects in the roadway to reduce “false alarms,” but, according to one of the many findings of the resulting National Transportation Safety Board (NTSB) report, the fire truck was no false alarm. Even though the name of the technology may imply the vehicle will handle itself in any situation, it’s still imperative for the driver (or operator) to pay attention and take control if necessary, regardless of successful experience with the system’s performance in more ideal situations.

See also: How to Prepare for Self-Driving Cars  

Consumer Trust and Acceptance Needed for Adoption of Self-Driving Vehicles

No manufacturer has a ready-for-purchase, self-driving vehicle available today. The safety technology in 2019/2020 model-year vehicles is what the industry calls Advanced Driver Assistance Systems (ADAS). These include features like adaptive cruise control, forward collision warning, lane-keeping assistance systems and automatic parking, to name a few. Although truly automated features are not yet available, the driver must remain engaged regardless of what safety system is activated, even if his or her feet are off the pedals and hands are off the steering wheel. Unfortunately, consumers don’t seem to fully understand this, which will hurt future acceptance of self-driving vehicles, as crashes occur that are caused by misunderstanding of systems.

ADAS features—the building blocks for full vehicle automation—are designed to notify the driver of situations that may lead to a collision and step in if the driver fails to act. Roughly 60% of new vehicles sold today are equipped with some or all of these technologies, which the National Highway Traffic Safety Administration (NHTSA) says could reduce crashes and save thousands of lives.

However, many drivers have deemed some ADAS alerts so annoying or bothersome that they disable them. Nearly one-fourth (23%) of customers with lane-keeping and centering systems—one of the most prevalent safety technologies on the road today—fall into this category, with 61% sometimes disabling the system and possibly trying to avoid them on future vehicle purchases, according to the 2019 J.D. Power Tech Experience Index Study.

Consumers who are concerned about cars being able to drive themselves want more information about these complex systems, as well as more channels to learn how to use them or how and why they kick in. Dealers remain one of the main partners to educate consumers about what these technologies bring to the table and help consumers trust that systems are going to kick in when they’re supposed to, as well as understand when they’re working properly.

The Cost of Repairing Safety Technology

Automakers have developed incredibly rigorous standards of research and development, testing and manufacturing to ensure these technologies work reliably. However, the same cannot be said of the automotive service and repair shops we depend upon to safely fix the 13 million vehicles involved in a collision each year.

There is no clear way for consumers to know the ADAS features in their vehicle have been properly repaired following a collision even though they may receive a report or invoice stating this to be the case. This is another area where trust will help garner consumer adoption of self-driving vehicles.

The repair industry is still trying to understand and operationalize these very complicated and delicate technologies. For example, many ADAS features rely on cameras to help determine a vehicle’s position in relation to the road, stationary objects and moving vehicles or people. These cameras may be mounted in different areas depending on the vehicle’s make and model. Something as seemingly simple as replacing a cracked windshield could mean the difference on whether a particular safety system continues to properly engage, if the new windshield isn’t designed or calibrated for the correct model’s specifications.

Even though most consumers leave the repair shop trusting that their vehicles are functioning properly, given the wide disparity between manufacturers’ product offerings, the complexity of calibration that is required for these technologies and the repair facility’s capabilities, that trust is possibly misplaced.

See also: The Evolution in Self-Driving Vehicles  

It would be beneficial for the service and repair industry, car buyers and the insurance industry as a whole for automakers to develop a uniform process and governance that all repair facilities can use to verify that any repairs for vehicles equipped with ADAS features are calibrated correctly. This would help ensure the accuracy and consistency of driver assistance technology repairs through a vehicle’s lifecycle. Unfortunately, there’s no clear indication of when something like this might be put into place, which further limits the potential for fully automated vehicles to grow beyond a niche in the automotive marketplace.

The main factor in making self-driving vehicles a reality is transparency. Keeping consumers informed about all aspects of the technology they’re investing in—why they need it, how it works, when it will activate and how to tell if it’s still functioning as intended—will go a long way to keep this journey marching forward with fewer roadblocks.

4 Ways Telematics Is Improving Car Safety

Recent corrective pricing aimed at combating deteriorating loss costs across the commercial auto insurance industry has put increasing pressure on fleet managers and employees insured. Driving the point, commercial auto insurance renewal rates increased 4.5% in Q1 2019, inching toward the 6% to 12% increase predicted in 2018. Luckily, the use of telematics – specifically vision-based AI solutions – has presented an opportunity for business fleets to identify unsafe driving, analyze the conditions in which they occurred and implement measures to reduce it, thereby lowering premiums and increasing safety measures.

Currently, the automotive usage-based insurance market, which gives insurance companies the ability to quote coverage costs specific to driver behavior, has 65.1 million policyholders and is expected to grow in coming years. UBI separates itself from traditional formulaic premium quoting and serves as a voluntary policy in which drivers may pay less if they provide the insurer with access to all driving behavior up front. The tighter, streamlined insurance supply chain formed through the adoption of telematics and usage-based models ultimately benefits both the insurer and the insured.

Here are four ways telematics is evolving commercial auto insurance:

1. Improving overall safety

Safety is the top line item in both insurers’ and insureds’ objectives. By collecting data on driver speed, harsh braking, rapid acceleration, driver drowsiness, etc., vision-based AI solutions allow employers to record incidents, intervene in unsafe driver conditions and train employees to practice safer habits. By agreeing to submit behavior, actions and conditions to the insurer, drivers are generally more conscious of their surroundings and position – increasing awareness and promoting a culture of safety.

While in-cab cameras and vision-based technologies may not be able to prevent an accident in real time, they do ensure measures are taken to prevent future incidents. Captured video gives employers a passenger-seat view of employee driving behaviors and enables them to correct bad driving habits and instill better ones. From the employee, to the employer, to the insurer, having access to driver behavior data creates a safety ecosystem where all parties can manage and build on driver improvement.

See also: A Vision for 2028, Powered by Telematics  

2. Providing hard metrics

Unsafe drivers can put employers at risk for a 10% to 15% increase in insurance rates. Ultimately, the goal is to hire only safe drivers. However, mistakes do happen, which is why fleet managers turn to telematics software to help improve existing driver performance. Not only does real-time telematics enhance driver safety, but it also gives weight to the claim that a company’s drivers are safe, making premium cuts and discounts from commercial auto insurers more likely.

Companies using telematics to monitor driver behavior receive a 5% to 15% insurance discount on average. The concrete evidence provided when harnessing this data gives fleet managers peace of mind that each driver is maintaining a safe speed and obeying state driving laws. In the event of an accident, the data provided can help determine liability in a claims settlement, potentially protecting businesses from false claims and subsequent rate increases.

3. Adding a next-generation visual component

Telematics technology has been around for decades – not solely for automotive purposes, either. As it became more commonplace in fleet monitoring, traditional uses involved the collection and distribution of data to support claims and flag dangerous behavior. Now, the convergence of telematics data with video and AI, vision-based technology is giving fleet managers and insurers more in-depth, real-time insight for decision making.

The industry is starting to see the virtual and real world blend together with vision-based solutions that provide context about what is going on inside a vehicle at the time of an alert. Telematics technology previously existed to inform companies when a driver was being erratic or braking too hard, and before now little to no context was provided as to the condition surrounding the event. New vision-based video solutions are incorporating artificial intelligence and machine learning, which in some cases leads to drivers being rewarded for defensive driving when they would have previously been penalized for seemingly dangerous behavior.

4. Developing a mutually beneficial partnership

The annual accident rate for commercial fleets is around 20%, and each accident can cost an average of $70,000. Not only is this detrimental to the driver and the company employing the driver, but it also makes insuring a great risk.

See also: Advanced Telematics and AI  

The information provided through today’s telematics technology solutions allows insurers to assess potential customers and associated risk, and fleet managers to lower insurance premiums. As next-gen telematics technology continues to evolve, fleet software companies are starting to partner directly with insurance providers to give discounts to businesses that adopt telematics software to track safety and monitor assets. If drivers are continuously being recorded and reported, auto insurers are more likely to be comfortable with providing affordable coverage, knowing they can easily spot potential liabilities.

The rise in premiums and increasing renewal rates designed to combat auto insurance market instability can only be deterred through the use of telematics technology that monitors, reports and supplies driver data directly to the insurer. Engaged companies are using this solution to drive growth, reduce risk and distance themselves from the competition. This insight, on average, encourages insurance discounts that not only benefit the company but encourage drivers and their fleet managers to improve safety practices, ultimately benefiting the insurer, as well.