Tag Archives: roadside assistance

3 Ways to Bar Fraud in Roadside Assistance

Unemployment is rising due to COVID-19, and some of the top risk management firms in the industry have indicated that fraud will also quickly increase. While claims fraud, inflated repair invoices and other common scams are probably the first that come to mind, roadside assistance fraud is another issue to which insurers should pay attention. It’s more common that one might think.

Especially as insurers increasingly offer ecosystem services such as roadside assistance to strengthen customer loyalty and generate additional revenue, it’s important that they ensure their roadside assistance partners are taking measures to protect against fraud, which can range from customers abusing the aid to get free gas, to tow operators sending fraudulent invoices. 

Here are some of the ways to protect against roadside assistance fraud:

Fast Payments Promote Trust

The adage, “An ounce of prevention is worth a pound of cure,” holds true in roadside assistance fraud. Instituting policies that reduce the incentive to commit fraud is far less painful than attempting to recover a loss, and one of these measures is to pay tow operators quickly. Especially in difficult times, those who issue payment within minutes instead of the standard Net-30 will foster loyalty that cuts down on fraud, especially while many companies are struggling to keep operations running. 

Tow operators balk at complex billing that deducts difficult-to-understand fees from their payment. The fees create unpleasant surprises that can make the difference between a profit and a loss. So, make sure that roadside assistance partners offer clear and transparent billing.

Transparency in Invoicing

With fraud on the rise, be on the lookout for roadside vendors that will attempt to bill you for “ghost” services. One way to mitigate this type of fraud is by asking your roadside vendor to provide transparency into completed services, ideally in real time. Require your roadside vendor to provide an unfiltered view into jobs, as well as customer confirmation that the job was completed. This kind of transparency makes it far less likely that you’ll be inaccurately billed or overcharged. Plus, this level of transparency gives you a better view into the customer experience. 

See also: 3 Ways AI, Telematics Revolutionize Claims  

Transparency in Operations

History tells us that, during times of high unemployment, we are likely to see more bad actors entering gig economy jobs. But fraud is often easily caught at the background check level, which can prevent bad actors from getting into the system in the first place. While it’s easy to provide a false name, it’s more difficult to provide a false Social Security number and matching drivers license. So, it’s important to have transparency in how tow operators are onboarded into your roadside assistance partner’s network and the methods they use to verify the identity of each driver and the person’s background. Ask about the types of checks they’re using to ensure identity verification, proper licensure and insurance compliance. Ideally, you want visibility all the way down to the driver level of who is servicing policyholders.

You need transparency because, while background checks have been an industry standard for years in roadside assistance, they may not be conducted at the appropriate level. For example, it’s common to accept a prior, third-party background check for a new contractor, a practice that leaves critical gaps in a contractor’s history and doesn’t necessarily report on charges or information relevant to the position. A “clear background check” usually does not tell you that the driver’s license is suspended, for instance. 

Background checks should be run annually at a minimum, but there are now next-generation background check services that will run in the background to provide live monitoring of arrest feeds, county reports and other proprietary information sites. This kind of continuous monitoring can flag events that could signal trouble, providing the opportunity to prevent fraud before it occurs.

The Importance of Analytics

Some policy holders may look to their roadside policy to help get what they see as “free fuel” as many times as possible. It’s a common scam, where drivers purposely avoid filling up and, when they run out of fuel, call the roadside assistance service to get some for free. 

This kind of fraud is most effectively detected through technology, specifically artificial intelligence, machine learning and analytics. Data analysis can identify previously overlooked trends to catch these kinds of issues and resolve them quickly. Insurers save money when machines and automation do the work instead of adding to headcount or finding problems only after the damage has been done. 

Even as fraud is anticipated to increase, roadside assistance many times has been overlooked. Don’t settle for passive fraud detection. Demand transparency and encourage the use of technology to mitigate risk, which will both reinforce your reputation and drive your bottom line.

Telematics: No Longer Just For Cars

The use of telematics in car insurance isn’t new. For the past few years, more and more drivers have been signing up to have little black boxes installed in their cars that monitor their driving behavior, as insurance companies offer incentives such as lower premiums and discounted rates for safe drivers.

By allowing insurers to track their driving behaviors – including average speed, braking force and distance driven – drivers are able to negotiate lower premiums and other benefits, which many view as a fairer and less discriminatory way of assessing risk.

From a commercial point of view, if we can promote and encourage safer driving on the road then the number of crashes will come down, and the cost to the insurance industry will reduce accordingly – and those savings will be passed on to the public.

Premiums for 17-year-olds with telematics boxes are half what they were four years ago overall, and statistics suggest accident rates within this age bracket are also coming down. Technology, and technology-enabled propositions, have really reduced claims costs, especially for young drivers.

“Black box insurance” has other benefits, too. Many insurers also offer free anti-theft tracking and roadside assistance through the device, and so far RSA has a 100% return rate on stolen vehicles that have a telematics device fitted.

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Enter the era of the smart home

With the benefits of telematics so clearly proven within the automotive industry, insurers are now turning their focus to the residential realm – in a bid to create “smart homes” that are intuitive and responsive to internal and external risks.

For many homeowners, the ability to control their climate, lighting and entertainment devices is one of the main attractions when it comes to home telematics, whereas insurers are drawn to the security benefits offered.

Luckily, telematics-based home insurance offers both parties the best of both worlds – convenience and risk mitigation, all in one handy tech-savvy package.

Smart home = smarter home insurance?

Just as black boxes in cars reward safe driving behaviors with lower premiums and discounts, smart home owners could reap the benefits of a connected abode. From discounts for locking the door and setting the alarm, to a fairer, up-to-date assessment based on moisture, flooding or carbon monoxide monitoring, home telematics can give consumers more control over their insurance rates and premiums, as well as a more in-depth understanding of their utilities usage, environmental risks and overall home security.

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In fact, smart home technology-based insurance has the potential to improve on existing discounts or lower premiums for features like security systems – simply by ensuring that these features are regularly used.

With people buying smart switches and systems, insurers are looking initially for propositions that help reduce the impact, even eliminate, some claims around water, theft and fire.

What’s next, connected pets?

It may seem like a sci-fi fantasy, but telematics for pets is set to be the next game-changer in the insurance industry, which is no surprise given that around 2.6 million people in the U.K. have pet insurance.

Pets are seen as part of the family, and owners spend a considerable amount on maintaining their furry best friends’ health, well-being and fitness. But how do we keep an extra close eye on our four-legged friends when we don’t speak their language?

Pet telematics: Going beyond the microchipping process

It’s not as disturbing or invasive as it sounds. All it takes for pets to join the telematics generation is a small GPS device – which is clipped to a collar or inserted under the dog’s skin to record its movements and activities throughout the day.

When paired with a smartphone app, this safe, easy technique allows owners and insurers to monitor pets’ body temperatures, hormones and heart rates, with some even going as far as tracking bowel movements – and this data is collated to form a comprehensive picture of a pet’s health and lifestyle.

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Pet insurance is really a well-being product – private medical insurance for cats and dogs, effectively. Pet obesity results in a lot of claims, so if pet telematics can encourage owners to have healthier, more active pets, he’s for it.

What’s in it for consumers? 

The use of telematics in everyday life and activities puts consumers in the driver’s seat when it comes to their insurance policies and premiums. By having access to detailed data on their driving, home security and pet care, ordinary consumers can become more aware of the risks around them, which could spur them to change or improve their behavior.

People want to be healthy and happy, and not have to deal with the aftermath of an insurance event. The common thread across telematics is that technology creates proposition that either prevent or minimize the impact of claim events.

What about privacy concerns?

While many customers may balk at the thought of having their lives monitored, a recent Deloitte survey has shown that more than half of respondents were willing to share private information for a premium discount. This shows that, although privacy concerns remain top of mind for most, a sizable incentive can override that resistance to transform consumers into adopters. See the Deloitte report here.

What’s in it for insurers?

Telematics enables insurers to create products and services that accurately reflect customers’ risk.

Perhaps that explains why telematics has become increasingly popular among consumers and insurers over the past few years. A study by ABI research estimates that global insurance telematics subscriptions could exceed 107 million in 2018, up from 5.5 million at the end of 2013. It also predicts that usage-based insurance will represent more than 100 million telematics policies and generate in excess of €50 billion in premiums globally by 2020.

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Telematics can move insurers from dealing with incidents, to stopping those incidents from being as bad as they could otherwise be. Using technology lets insurers move into that prevention mitigation space.

This article originally appeared on www.rsagroup.com/the-thread.

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InsurTech Trends to Watch For in 2016

The excitement around technology’s potential to transform the insurance industry has grown to a fever pitch, as 2015 saw investors deploy more than $2.6 billion globally to insurance tech startups. I compiled six trends to look out for in 2016 in the insurance tech space.

The continued rise of insurance corporate venture arms

2015 saw the launch of corporate venture arms by insurers including AXA, MunichRe/Hartford Steam Boiler, Aviva and Transamerica. Aviva, for example, said it intends to commit nearly £20 million per year over the next five years to private tech investments. Not only do we expect the current crop of corporate VCs in the insurance industry to become more active, we also expect to see new active corporate VCs in the space as more insurance firms move from smaller-scale efforts — such as innovation labs, hackathons and accelerator partnerships — to formal venture investing arms.

Majority of insurance tech dealflow in U.S. moves beyond health coverage

Insurance tech funding soared in 2015 on the back of Q2’15 mega-rounds to online benefits software and health insurance brokerage Zenefits as well as online P&C insurance seller Zhong An. More importantly, year-over-year deal activity in the growing insurance tech space increased 45% and hit a multi-year quarterly high in Q4’15, which saw an average of 11 insurance tech startup financings per month.

In each of the past three years, more than half of all U.S.-based deal activity in the insurance tech space has gone to health insurance start-ups. However, 2015 saw non-health insurance tech start-ups nearly reach parity in terms of U.S. deal activity (49% to 51%). As early-stage U.S. investments move beyond health coverage to other lines including commercial, P&C and life (recent deals here include Lemonade, PolicyGenius, Ladder and Embroker), 2016 could see an about-face in U.S. deal share, with health deals in the minority.

Investments to just-in-time insurance start-ups grow

The on-demand economy has connected mobile users to services including food delivery, roadside assistance, laundry and house calls with the click of a button. While not new, the unbundling of an insurance policy into financial protection for specific risks, just-in-time delivery of coverage or micro-duration insurance has already attracted venture investments to mobile-first start-ups including Sure, Trov and Cuvva. Whether or not consumers ultimately want the engagement or interfaces these apps offer, the host of start-ups working in just-in-time insurance means one area is primed for investment growth in the insurance tech space.

Will insurers get serious about blockchain investments?

Thus far, insurance firms have largely pursued exploratory investments in blockchain and bitcoin startups. New York Life and Transamerica Ventures participated in a strategic investment with Digital Currency Group, gaining the ability to monitor the space through DCG’s portfolio of blockchain investments. More recently, Allianz France accepted Everledger, which uses blockchain as a diamond verification registry, into its latest accelerator class. As more insurers test blockchain technologies for possible applications, it will be interesting to monitor whether more insurance firms join the growing list of financial services giants investing in blockchain startups.

Fintech start-ups adding insurance applications

In an interview with Business Insider, SoFi CEO Mike Cagney said he believes there’s a lot more room for its origination platform to grow, adding,

“We’re looking at the entire landscape of financial services, like life insurance, for example.”

A day later, an article on European neobank Number26, which is backed by Peter Thiel’s Valar Ventures, mentioned the company would like to act as a fintech hub integrating other financial products, including insurance, into its app. We should expect to see more existing fintech start-ups in non-insurance verticals not only talk publicly but also execute strategic moves into insurance.

More cross-border blurring of insurance tech start-ups

Knip, a Swiss-based mobile insurance app backed by U.S. investors including QED and Route66, is currently hiring for U.S. expansion. Meanwhile, U.S. start-ups such as Trov are partnering and launching with insurers abroad. We can expect more start-ups in the U.S. to look abroad both for strategic investment and partnerships, and for insurance tech start-ups with traction internationally to expand to the U.S.

Is Verizon About to Outmaneuver Insurers?

Today, my (snail) mailbox contained a postcard from Verizon offering to turn my car into a connected car. To be more precise, the offer was to my 22-year-old daughter — neither my wife nor I got the same offer. In essence, Verizon provides a device that plugs into the OBD port, a second device that clips on the visor and a smartphone app to control the service. This is an excellent example of other industries seizing on opportunities that should be prime territory for insurers.

Verizon’s hum service (www.hum.com) includes capabilities in six areas: roadside assistance, diagnostic alerts, a vehicle locator, a certified mechanics hotline, maintenance reminders and hotel/car rental discounts. It’s being pitched as a great holiday gift — just plug it in, and you are ready to go!

This is by no means the only offer of this type. Other companies such as Automatic Labs (www.automatic.com) sell OBD devices that provide a variety of services. Automatic has a “Do not disturb” app (Androids only) that keeps the phone quiet while someone is driving, to minimize distractions and reduce the urge to text. The Automatic device/apps will also alert the driver when she is exceeding the speed limit, track when the ignition is on/off, send help if you crash and trigger actions like closing the garage door when you leave the house.

At SMA, we’ve been advocating more varied value propositions for telematics for some time. Some insurers outside the U.S. have ventured into value propositions that have included vehicle location, vehicle performance and some of the other services offered by Verizon. But, in the U.S. today, the primary value proposition for personal auto is the potential to reduce premiums; a few companies are providing other services, such as encouraging safe driving.

What is frustrating is that the insurance industry was the pioneer in telematics and experimenting with the use of OBD devices, car navigation systems and mobile apps based on real-time vehicle data. These efforts stretch back to the late 1990s, with pilots by UK-based Norwich Union, then Progressive and others. Unfortunately, most insurers have been thinking about the potential in the context of current insurance products — a coverage-based view.

The connected world is emerging rapidly, presenting many opportunities to provide services to homeowners, businesses, vehicle owners and other segments. Many of these services are aimed at improving safety and providing peace of mind to individuals and businesses.

Hmmm… sounds curiously like the core mission of the insurance industry.