Tag Archives: telematics

Will COVID-19 Give Telematics New Life?

Over the past several weeks, there have been numerous aerial photos of some of the nation’s largest highway systems – devoid of vehicles. The sight of tens of miles of ramps, junctions and straightaways with no visible cars is startling, almost a made-for-Hollywood view. But COVID-19 has taken a huge percentage of people out of their vehicles, leaving their cars idle in driveways and garages. Given that vehicle usage is a fundamental and historical rating factor – a predictor of accident frequency – one could conjecture that telematics might be heading toward a new and shining position within the industry.

There are several points for insurers to consider.

  • A huge percentage of businesses that have never had a home-based workforce have been compelled to have one due to stay-at-home advisories. Published interviews indicate that company executives across all industries believe the experience with COVID-19 will change the nature of work even faster than anticipated. More workers will be home-based either permanently or part-time. Will a greater percentage of consumers see the value of usage-based, telematics-driven insurance, given that their vehicles will be idle for greater periods? Insurers need to be prepared for this outcome.
  • Insurers that have yet to commit to telematics programs may well be feeling the strain of not doing so. Many of the largest auto insurers have announced they will refund portions of automobile premiums due to the precipitous decline in miles driven. In particular, Allstate knows, through its telematics programs, that driving has declined by 35% to 50% in terms of miles. This makes the company’s refund program much more fact-based. Clearly, there is significant customer goodwill value in making refunds voluntarily. But what if regulators require insurers to do this across the board? Without telematics data, determining refunds is much more of a guess. And no insurer likes guessing. For the long term, telematics data can facilitate a smooth communication process between insurers and regulators on a number of levels, and this is a good thing.
  • From a claims perspective, adjusting losses in a time where staying home is the norm is a huge challenge. There are a number of technologies that insurers are using to compensate, most prominently DIY photo-estimating. In some cases, insurers are rolling out technologies that were in limited tests to cover the gap in face-to-face adjusting practices. However, sophisticated telematics devices can detect crash damage and relay crash information automatically, eliminating the DIY step and improving accuracy. While there is a fervent hope that we never again have to self-quarantine due to a pandemic, there is significant value in getting sensor-based, telematics crash information directly from point of impact.

See also: 10 Moments of Truth From COVID-19  

To date, telematics adoption has settled in as a segment. Projections that telematics would be the dominant base for all auto programs have not materialized. There are many reasons, but maybe the COVID-19 pandemic will be the impetus that consumers and insurers need to up adoption rates. In the not-too-distant future, the highways will again fill up with more than medical professionals, first responders and retail workers. Why waste the opportunity to use actual data to improve insurance outcomes? Telematics can make the connections!

3 Ways AI, Telematics Revolutionize Claims

The automotive claims process has long been strenuous, time-consuming and costly both for insurers and consumers. The moment an incident occurs, a driver is placed in a world of stress. In addition to managing the emotional strain that is a car crash, the driver now has to deal with several different parties to repair the damage. Traditionally, it takes one to three days after filing a claim to initiate contact with an insurance adjuster (it takes even more time if the adjuster needs to inspect the damage).

There is suddenly an unexpected burden consuming time and money and requiring paperwork. But advancements in artificial intelligence and telematics (such as our new Claims Studio) can revolutionize the claims system by validating claims, processing them much faster and placing safety at the forefront for drivers. 

Here are three ways the insurance industry can adapt to improve the claims process: 

Validating Claims

Automotive claims have historically been a manual process, where drivers retell their side of the story following a collision. These details are then shared with insurance companies, adjusters and, at times, even courts, to resolve claims and disputes. This process leaves room for ambiguity and human error, because, as we all know, there are two sides to each story. We also have to take into consideration the shock that results from a car crash – a driver might not remember or realize immediately the need to take photos of the damages or call the insurance company to begin the claims process.

Insurers can help drivers mitigate this complicated and stressful process by implementing advanced technologies, now available, that provide accurate, unbiased crash storylines. These narratives detail key findings such as the severity of a crash, where the vehicle was hit, the driver’s speed (before, during and after a collision), the weather and more. A claims adjuster needs this information to do his or her job. When this information is incomplete or inaccurate, the process takes longer, and costs increase for the driver.

Accelerating the Claims Process

In addition to enabling insurers to settle claims more seamlessly and accurately (preventing potential fraud), these technologies aid in settling claims earlier, paving the way for better customer experiences. For example, our solution automatically populates crash insights and reporting into a web portal or directly into an insurer’s claims management system, providing insurers with many details needed to quickly process a claim. By offering claims adjusters this information within 10 minutes of an accident, insurers are empowering them to help drivers quickly resolve their issues.

Placing Safety at the Forefront

The use of artificial intelligence and telematics has brought significant benefits to insurers and consumers. Several auto insurers are already using mobile telematics to assess risk and promote safer driving behavior, but the benefits don’t start and end there. In fact, one of the most important – and life-saving – aspects of the technology is the ability to detect crashes within moments of their occurring. Technology provides real-time notifications of a vehicle crash to quickly send roadside assistance to drivers when they need it most. By providing critical details like GPS location, time and driver identification, new crash detection solutions enable insurers to save valuable time in emergency situations, offering an added level of peace of mind. 

See also: Untapped Potential of Artificial Intelligence  

In some instances, the new technologies could also save a life. One instance is Discovery Insure, a South Africa-based insurer that uses our Crash Detector to send immediate roadside assistance and paramedics to customers following collisions and life-threatening crashes. One customer, Evelyn Sadler, received immediate attention after a taxi swerved into her vehicle, causing it to go airborne. As the distracted driving epidemic increases, causing 1.25 million people to die in road crashes each year, insurers can offer drivers technologies and solutions that can keep safety at the forefront and prevent many deaths. 

The future of the automotive claims system is already here, with several insurers realizing the impact this technology has on their bottom line. I’m excited to continue to watch this space grow – and hope that additional insurance organizations will quickly follow suit.

The New IoT Wave: Small Commercial

In our hyper-connected society, it was estimated a few years ago that on a normal day another 127 devices are connected to the internet each second. Moreover, the Internet of Things (IoT) trend is accelerating. Insurers cannot stop this; they can only leverage the data that comes from connected devices, or ignore this data.

As of today, the insurance sector has exploited the data more in personal lines than in commercial lines. Insurance telematics on personal auto has been out there for more than 15 years. The Italian market has achieved more than 22% of telematics penetration on the auto insurance business; in the U.S. the penetration is still low, but in the last two years the market has evolved significantly. French insurers have built a success story on smart home insurance (télésurveillance services) over the same period; even in the U.S., experiments are progressing as players such as American Family lead the pack.

We are starting to see the emergence of commercial line applications, especially in the U.S. We have some products on auto commercial lines, such as Progressive Smart Haul, that are gaining traction, and the interest for the application on other business lines is growing.

However, on the insurance commercial lines — outside of commercial auto — we are still talking about theoretical ideas and proofs of concept (POCs), and there are only a few already commercialized products. At the IoT Insurance Observatory – a think tank that in North America has aggregated almost 30 members, including six of the top 15 P&C insurance carriers, as well as the main reinsurers – I’ve directly seen this growth of the appetite of the traditional insurers for IoT applications.

See also: Will IoT Upend Insurance? [Hint: NO!]  

The opportunity

The insurance sector has four different opportunities to leverage the IoT data on commercial lines:

  • There is the opportunity to insure new risks that are emerging due to IoT technology, but also to insure the outcomes of IoT solutions adopted by a business owner.
  • Another area of opportunity is to develop new ways to insure existing risks. Let’s think about real-time measurement of the key drivers for the exposure of an insurance coverage, such as the presence of people in an area for general liability or the inventory for theft insurance.
  • IoT data (and processes based on this data) allows improvements in the performances of the core insurance activities (underwriting, pricing, risk management and claims handling) for current insurance products,
  • There is the opportunity to sell IoT-based services.

The last two are the key aspects that have worked well in the usage of IoT on personal lines. Indeed, based on the Observatory research over the past few years, the most relevant international insurance IoT success stories have five common characteristics:

  • A product sold through current distribution channels, frequently as an option on an existing product;
  • A closed system with devices/app provided by the insurer;
  • Fees paid by the customer for services, which include the rental of the devices;
  • Explicit usage – a customer consents at the moment of purchase, giving the insurer access to data that will help it improve risk self-selection, loss control, consumer behaviors and pricing;
  • The sharing of a material value with customer through discounts, cash back and other incentives.

The marriage of IoT-based services and impacts on the core insurance activities is going to allow insurers to obtain a competitive advantage on small commercial. This is typically a segment that has not jet been penetrated by IoT services – because the first targets for IoT companies have been large and medium enterprises – and the insurance players can succeed in delivering this bundle between IoT services and insurance coverages to this segment. The synergies between those two aspects – services and impacts on the core insurance activities – are possible because the same data used to deliver services allows improvements to the technical profitability of the insurance business. IoT allows the creation of value on the insurance P&L, and this value can be shared with the client, creating a valuable bundle between insurance coverages and IoT solutions. Obviously, the bigger the difference between insurance premium and service cost, the higher the potential of the bundle.

Let’s think about how spending for commercial line coverages – even excluding commercial auto – can easily be several thousand dollars for a small enterprise.

The value creation

The sensors necessary for service delivery – let’s, for example, think about security cameras with AI on the edge – can be fundamental to detecting risky situations. This is precious information for an insurance company. First of all, this allows claim prevention and damage mitigation. This could be achieved through real-time alerts to the on-field supervisor, such as the store manager in retail shops, or to the provider of the necessary emergency services, such as the emergency plumbing service provider. The second use case, which is linked to the detection of risky situations, is reporting. The quick delivery of insights provides objective information to the claim handlers. This way, the insurance company can be ready to address the claim in a more efficient and effective manner, limiting fraud and inflated claims. The reporting of claims and near-miss incidents also allows for providing automated loss control advice to the business owner. This information can also be used to take underwriting decisions at renewal, and even to intervene on pricing.

Value creation is also possible using sensor data to manage behavioral change mechanisms. As found in experiments on personal lines – from life, to health and even to auto insurance – working on awareness creation, behavior suggestions and incentives it is possible to obtain a reduction of the expected losses of an insurance portfolio.

One last aspect to consider is the self-selection effect. The personal line experience has taught us that, at each pricing level, those who accept being monitored are better risks (lower loss ratio) than the peers who don’t accept. So, we can be pretty confident that the business owners who chose the IoT-based insurance coverage are better risks (because they have nothing to hide from their insurers) than their peers who don’t accept to be monitored.

See also: The Dazzling Journey for Insurance IoT  

The insurer who succeeds in these use cases will obtain the waterfall represented below, where the sum of the service fees and the effect of risk selection, loss control, risk-based pricing and behavioral change – all the elements that in my previous articles I have defined as “value creation levers” – covers the IoT costs and allows the creation of a relevant amount of extra value. This value can be shared first of all with policyholders through discounts and incentives. However, part of it should be shared also with intermediaries (agents and brokers involved in the insurance policy distribution), through extra commissions, to scale up the IoT-based portfolio.

Challenges

The main challenge will not be the choice of technological aspects, as many may expect. The trickiest aspects are the design of the insurance IoT strategy, the delivery on the field and the progressive optimization based on the lessons learned.

First of all, it will be key to identify and design the services that the target customers are interested in paying for. The sensors necessary for these services will be the foundation of the insurance IoT approach, and all the additional sensors with a cost lower than the achievable benefits should be added on top. In the design of the insurance use cases, all the different functions related to the value creation levers described above must be involved, as well as all the business lines of the insurance group. The potential in each coverage and each endorsement dedicated to the segment has to be squeezed to maximize the value creation and therefore the return on the IoT investment. In the cost-benefit analysis, it is necessary to adopt a multiyear perspective, thinking toward the amortization of the hardware cost over multiple periods. These are the same challenges that have been successfully addressed by the best practices on personal lines.

Specialization of the solutions by segments will be necessary to deliver effectively. This aspect is an additional challenge that was not present in the personal lines experience, which instead has easily been addressed with a “one size fits all” approach.

Another complexity, which was not present in personal lines, is the presence of multiple actors to be involved in the adoption of the solution, in the prevention/mitigation and in the behavioral change. The business owner (or eventual employees appointed to purchase the insurance coverage), the on-field supervisor (such as a store manager) and operative employees are relevant stakeholders. The IoT insurance approach must take into account all of them to succeed.

Conclusions

Let’s consider the reasons for investing to overcome these barriers facing the IoT-based opportunity. There is an opportunity to win more business and to generate a more profitable commercial line portfolio. The right IoT approach will generate knowledge about clients and their risks (which will lead to opportunities for cross-selling and up-selling) and produce positive externalities for society (by contributing to the modernization of the small and medium enterprises of the country).

This article has been originally published on Carrier Management.

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.

How Technology Is Changing Warranty

Let’s take a brief trip down memory lane.

In days past, whenever consumers wanted to make a major purchase—say, for a large appliance or the latest electronics—they had to leave the house and visit their local retailer. If they were concerned about the well-being of their new investment, they’d add a warranty plan once their transaction was complete. If something with their new fridge or stereo system went wrong, they’d need to pick up the phone to schedule a service visit.

Things have changed. Let’s take a look at just how much technology is influencing purchasing habits and changing the warranty experience for consumers, retailers and providers.

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Today, when consumers need to make purchases both big and small, they’re often opting to make them online. For big box retailers, incorporating additional warranty protection on their websites to accompany those purchases is no sweat; they’ve got the capability and budget to do so. But what about smaller retailers?

According to a report by CBRE Group, about 30% of e-commerce retail is sold by small and midsize companies. While many of these companies might want to offer online consumers the benefits of product protection like their big box counterparts, integrating third-party warranty protection with a retail e-commerce platform can be cumbersome. But some providers have cracked the code and developed apps that allow smaller retailers to level the playing field and easily establish and manage valuable warranty programs.

Another technology solution being explored is blockchain. For as long as anyone can remember, returns, warranties and service contracts have required proof of purchase. Blockchain capabilities can eliminate that need by decentralizing record-keeping, so all relevant parties can instantly access a digital proof of purchase, as needed. Innovative companies are already jumping on board and using blockchain to improve industry collaboration, increase customer satisfaction, boost efficiency and reduce prices.

Make the Connection

As the Internet of Things grows and consumers replace their obsolete, non-IoT devices, the true benefits of connectivity will continue to be revealed. For example, smart home technology will take the guesswork out of claims. Service providers and technicians will no longer be forced to rely on a customer’s diagnosis of the problem, because devices will accurately relay data about malfunctions or damage in real time.

See also: How Tech Is Eating the Insurance World  

Administrators will be able to better identify issues and potentially help the customer find a resolution via phone or chat, without a service visit. If a service visit is needed, the customer representative can approve repairs and estimate out-of-pocket costs in advance simply by using the data already available.

But before the advantages of this new technology can be enjoyed to their fullest, there are some obstacles to overcome. The complexity of connected devices can be a lot to tackle for many consumers. Without the help of a professional, new device setup and network connections can be time-consuming.

Recognizing the opportunity for increased customer satisfaction, streamlined processes and lower costs, service contract providers are stepping up their game to offer plans that not only cover repair and replacement but tech support, as well. This kind of 360-degree service plan can help simplify the consumer transition to the fully connected home experience.

Go Custom

Thanks to the intimate connection to products and data offered by IoT, the opportunity to customize service contracts and protection programs has never been greater. Driven by constant data collection, warranty analytics can be employed to create extended protection plans that categorize failures, identify customers who are most affected by these failures and key in on potential causes. These “intelligent” plans can help determine and customize proper coverage levels guided by each customer’s risk profile.

The opportunity to apply the data extends beyond the connected home to products on the road. Now with the help of analytics, the failures, causes and costs that affect drivers most can be identified to help create intelligent protection programs for automobiles.

Known as telematics, these systems facilitate the transmission of vehicle diagnostic data. Telematics can record a vehicle’s condition to provide quick, efficient analysis that can isolate an issue before it becomes a real problem. This technology can also simplify next steps by alerting the provider to the issue and directing the vehicle owner to the closest repair shop with relevant parts in inventory. This kind of efficiency can help consumers remedy potentially dangerous and costly situations early on, while also reducing expenses for service contract providers.

See also: Common Error on Going Digital  

While some may long for the old days, the benefits of new technology offer a chance to look on the bright side. For providers, retailers and customers, advancements have changed the warranty protection experience for the better and will continue to do so for years to come.