Auto Tech Driving Insurance Explained

Our interactions with cars change every year as new technology comes out to improve the experience. As such, auto insurance must find ways to adapt right alongside the industry. This is no mean feat and takes a lot of careful planning. 

Most recently, auto insurance companies have begun to develop automated ways of measuring and creating new plans. There are many benefits to this feature, including highly customizable plans.

The Complication

There is one complication with the plan to go full automation when it comes to insurance: people’s willingness. According to CCC Information Services, Inc.’s Crash Course report, until recently, most drivers were unwilling to share such detailed and personal information.

What sort of information do these metrics require? The predominant concern revolves around mileage. New features allow for easy personal data collection, including driving details, travel speed, and location.

Up until recently, only 41% of those surveyed were willing to share their data. That number has gone up to 54% and is likely due to the changes that the pandemic brought with it. Primarily the reduced time spent in cars.

One of the main concerns from users, unsurprisingly, is the breach of privacy. Specifically, these features would require drivers to give up information such as where they at which times, which can be a deal-breaker for many. According to a study run by Pew Research Center, only 37% of Americans found the offer appealing, even when taking benefits into account.

Benefits

Despite these concerns, there are plenty of benefits that come with auto tech driving insurance. Primarily, the data used to create an individual’s plan would be based on their driving – and theirs alone.

Instead of filling out several complicated forms, drivers can instead give access to their data metrics, allowing insurance companies to create an accurate and detailed plan that fits the users’ needs. It sounds complicated, but in truth, it makes things simpler. 

This practice is called usage-based insurance. In practice, it works through an app on your phone, which then transmits data to your insurance company. Most companies experimenting with the tech provide rewards for using the app – rewards that get better the more you use it.

Insurtech Explained and What It Means for Car Insurance

The advent of Artificial Intelligence (AI) is changing the way many industries operate; there’s no escaping it. Even the insurance industry is facing change, thanks to the creation of Insurtech, aka Insurance Technology.

What is Insurtech? 

Insurtech is a term for a broad range of technology, all of which is applied towards the insurance industry. More specifically, it’s the use of artificial intelligence and blockchains in the insurance industry. This applies to car, medical, life, and home. 

Insurtech was created to save insurance companies money, streamline the process, and make better and customized customer service. In the last few years, the Insurtech industry has boomed. New startups and older businesses alike are competing to create the best models, and it’s altering the way we look at insurance.

What Are the Different Types of Insurtech?

There are now several different types of Insurtech, a variety formed from the many different needs of the insurance industry. Each style has a different specialty, and there’s no need for mutual exclusivity between companies and types.

  • Artificial Intelligence/Machine Learning – Used for personalized services, competitive pricing models, predictive analytics, and chatbots.
  • The Internet of Things (IoT) – IoT is used for omnichannel communication and telemetry-based insurance policies and claim processing. 
  • Blockchain – Used to prevent fraud, create smart contracts, and help to track sensitive data.
  • Robots/Drones/Etc. – Can assist in designing programs, plans, find risk factors, operate where it is unsafe for humans, and create automation.

How Does Insurtech Work?

The end goal of Insurtech is convenience and efficiency. This technology has been designed to help both internally and externally. Meaning that the insurance companies and their clients both gain an advantage through its use.

Theoretically, Insurtech will make insurance more accessible, lower costs, decrease wait times, and allow for customized claims. All while reducing payroll costs, as there isn’t a person behind all of this.

What Are the Benefits of Insurtech?

Many of the benefits for Insurtech have already been mentioned above. They include: customized insurance policies, reduced run costs for insurance companies, better claims management, and better customer-facing tech, including apps and chatbots.

What Are the Concerns of Insurtech?

As with any rising technology, there will naturally be some concerns to go along with it. The dominant concern regarding Insurtech is privacy. Consider all of the private and sensitive information that insurance companies must collect and store. The introduction of any new technology always increases concern regarding the safety of this sort of information.

 

Personalizing the Auto Insurance Industry with the Help of AI

Every day digital advancements change the way we look at and interact with the world. New ways of sharing information and collating data have made things in some ways simpler, even in complex areas such as auto insurance.

Advancements in AI (Artificial Intelligence) are the most likely to bring a great chance to auto insurance. Currently, we are looking at an insurance market that has changed very little over the years. The real question is, how much longer can stagnation last?

AI still has a long way to go before it is on par with the beings portrayed in science fiction novels. Still, there are plenty of ways for modern AI to help the insurance world. AI processes can help with pricing, handling claims, and fraud detection, just to name a few options.

The advantage of using AI to set prices comes with the ability to create individualized and personalized policies. An insurance company that employs this tactic will provide custom quotes curtailed to the clients’ needs, creating a competitive advantage. 

Artificial intelligence could easily customize these policies based on user location, marital status, family status, the likelihood of premium charges, driving history, and more. Most notably, it could also make sure of IoT (Internet of Things) to draw in more personalized data.

Given the potential power of AI, the level of personalization is limitless. The policy could go beyond personal records and look into the car the coverage is intended for. Here crash and injury data could quickly come into play, as well as automotive history.

As for handling claims? It wouldn’t take much effort to automate the handling of certain claims through the use of artificial intelligence. This would save time and money in the long run and give clients a faster customer service experience.

In turn, this would shorten the time required for settling claims. This will result in happier customers, but it will help limit fraud cases in the process. This is a vital element, as insurance fraud is currently costing companies around $40 billion per year. AI can easily detect fraudulent cases, diminish risks, and streamline the process for legitimate cases.

 

What Is Usage-based Insurance (UBI)?

The traditional model of vehicle insurance has always been geared towards rewarding good drivers. Often, discounts are applied after a length of time without any claims or tickets filed. Specific demographics are at an automatic advantage because of the law of averages surrounding age and location. These conventional stereotypes are somewhat outdated and fail to take into account how much society has changed. A male in his 20’s will pay a much higher premium than a woman in her 50’s, regardless of both having a clean driving record. It will take the male driver much longer to prove that they are competent and trustworthy enough to have a lower premium.

 

Usage-based insurance (UBI) was introduced about ten years ago. Since then, over eight million UBI insurance policies were created. The appeal of UBI is that it looks at insurance in a completely different way. Additional factors are taken into account beyond demographics, such as how many miles you drive and whether you tend to stick to speed limits. Your driving habits will impact how much you pay, in addition to your vehicle type and location. This concept can be very favorable for both insurance companies and drivers. The incentive to drive carefully means fewer claims being filed, and drivers benefit from lower rates. 

 

Depending on whether you chose the pay-as-you-drive (PAYD) or pay-how-you-drive (PHYD) package, different metrics are measured by UBI’s telematics. These telecommunication devices monitor vehicles via cellular, GPS, and onboard diagnostics and then display those movements on a computerized map. Data is also transmitted to the insurance company for review, and it is broken down into specific details, depending on whether you have a PAYD or PHYD policy. PAYD programs will usually charge a monthly fee on top of a per-mile charge. PHYD is more invasive, monitoring how you brake, accelerate, slow down, and turn corners. People who opt-in for UBI policies benefit from multiple discount opportunities. Some agencies reduce rates as a signing-up bonus. 

 

While telematics is a helpful tool for measuring real-time vehicle data, it doesn’t provide driver data. Newer iterations are software-based, saving everyone money by not having to pay for telematics devices. Mobile telematics is also more accurate because of its ability to measure distracted driving moments and offer rates based on an individual’s driving habits.

The Future of Car Insurance Beyond 2021

The last year forcibly changed industries worldwide. No industry escaped, including the car insurance industry. While much of the world is gearing up for a bounce-back, all evidence indicates that the automotive industry will be one of the last to recover. 

According to a TransUnion survey, the impacts of the pandemic will linger well past 2021 for insurance agencies worldwide. Experts are even coming to believe that these changes may be permanent on some levels.

Digital Transition

Every industry has been working hard to adapt along with the discovery of technology. The pandemic forced this transition along faster, as general populations sought digital resources for their daily needs.

Bain & Company looked into how this might impact car insurance, and they found that the digital insurance sector had grown by around 20%. While that number may balance out after pandemic measures are reduced, it is just as likely that this has become the new norm.

Furthermore, people are seeking new avenues of finding, comparing, and choosing car insurance opportunities. The call to obtain quotes through websites has been steadily increasing. The insurance companies that meet those needs are doing better than those without.

Advancing Technology

Thanks to developments such as artificial intelligence, loT, and even self-driving cars, the automobile industry has been facing many technological advancements. As these technologies become more commonplace, insurance quotes and companies will have to adjust alongside them.

Theoretically, many of the advancements being made are helping to make the driving experience a safer one. 3D-LiDAR can detect potential collisions while assisting in smaller processes, such as parking. Removing the human element helps to reduce mistakes, and thus, accidents.

However, there are certain risks involved as well. This will require any insurance agency to seek the appropriate data to keep up with risk assessment modules. 

Generational Shifts

The generation dominating the insurance world will soon be shifting. For years it had been the Boomers and Gen X providing most clients in the insurance market. Naturally, with those generations came certain expectations, experiences, and regulations.

However, the number of Millennials in the insurance market has been steadily growing. Soon, their numbers will surpass those of their elders, meaning that the market will soon shift to cater to their demands and expectations instead. 

Millennials are part of the force behind the demand for better technology and online opportunities. Insurance companies will have to make an active effort to keep up with these demands or risk falling out of practice. 

 

Questions to Ask Before Buying Auto-Insurance

If you’re thinking about purchasing auto insurance, which we highly recommend you do, there are many factors that determine the price and what you are getting. Here are 5 questions you should always ask yourself before you decide on auto insurance, that may actually help lower the insurance rate:

How much do you drive each week?

This plays an important role in deciphering whether or not you should be taking public transportation to work or wherever you go on a consistent basis. Taking public transportation often helps lower your car insurance.

Can you offer a higher deductible?

Often times, if a person can pay a higher deductible, he or she will pay a lower price each month, which can end up saving you a lot of money in the long-run.

Do you have a good credit score?

This one probably doesn’t come as a surprise to you – bad credit often means you will be charged at a higher rate. This is mostly because auto insurance companies predict that if someone has bad credit, they will probably file a claim after an accident.

How old is your car?

Older cars will generally have higher insurance costs due to safety reasons. If you drive a car that is over 15-20 years old, you might want to think about dropping collision coverage because the monthly premium will most likely be more than the replacement value.

Do you work for a professional group or organization?

Check to see if your company has insurance discounts to offer you – this can save you a lot of money. Most companies will have some sort of employee benefits that you might be able to use for auto insurance. Always double check.

 

Auto Insurance: Why You Need It

Each year there are over 6 million car accidents in the United States. Though you may think that you’re a great driver and haven’t even been involved in a small fender bender before, accidents happen. And you should be insured when they do. On average, according to the National Safety Council the property damage cost of a car accident is around $9,300. If you were to add the amount of money spend after accidents that cause major injuries, you’re looking at around $80,000 each crash.

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Simply put, auto insurance protects you. Accidents happen during the most unexpected times, and there is a large chance that throughout your life, you will be involved in one. Not having auto insurance puts you at risk for not only your bank account, but all of your other assets as well.

Car insurance will help you throughout the entire process of getting into an accident, specifically throughout unpleasant paperwork, finding repair shops, and getting claims settled. In the event that you get into an accident with a driver who is not insured, your auto insurance company can help you recover a multitude of expenses. Auto insurance is there to help you and acts as guidance, which you will be glad you have if an accident happens to you or your family.

In addition, car insurance policies protect you from other drivers who are at fault. Everyone knows the uncanny amount of distractions there are on the road. From cell phones, to crying babies, applying makeup, road rage, or even a beautiful sunset. A reliable auto insurance policy will protect you from those kinds of reckless drivers so that you can drive with a peace of mind. The road is full of surprises, that’s why auto insurance exists to aid with each unique driving scenario.

Another great reason for you to have auto insurance is because it can supplement your health insurance. According to Esurance.com:

“Even if you do not have health insurance, car insurance can help pay for things your medical coverage might night – possibly including care for accident-related injuries, dental work, funeral costs, or extended nursing care during your rehabilitation,” (5 Reasons Why You Need Car Insurance).

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Though it should not be advised to not have health insurance, if you do find yourself in that situation, it is comforting to know that many auto insurance policies will be more than helpful.

Last, you need auto insurance because it’s the law in a majority of states. You should research the specific state you reside in to find out more details on liability coverage and financial responsibility bonds in relation to the minimum amount of car insurance that is required.

In conclusion, you need auto insurance. You won’t want to run the risk of not being insured. Insurance is protection, and we all need to be protected by the unpredictable road.

The Importance of Personal Insurance

Amigo MGANavigating the world of insurance can be a tough one. No one likes the idea of losing their valuables to the unplanned curveballs life throws. How do you know what’s worth protecting when investing in personal insurance? Following this handy list can help inform your choices when understanding which insurance is most important, and what a program typically covers.

Simple, important and a necessity if you’d like to go anywhere with four wheels, automotive insurance is paramount. However, it’s not enough to understand your state’s minimum requirements and purchase a plan based around that. Be sure and consult the agent you’ve chosen to purchase insurance from when building a policy. More often than not, they are genuinely attempting to provide you with the best possible coverage for your money, and auto-insurance is one of the few that get utilized the most.

Renter’s or homeowner’s insurance is fantastic for safeguarding what matters most. Renter’s insurance can differ from state to state, and where you decide to rent. Even if your complex does not require the purchasing of renter’s insurance, protecting your possessions from break-in or incidental damage is always a good idea. Homeowner’s insurance is a must-buy for what will possibly be the largest investment of your life. When carrying a mortgage, homeowner’s insurance is a necessity, but keeping a policy intact for when your mortgage is paid off is the best way to protect yourself from fire or natural disaster. Beyond disasters, homeowner’s insurance can and will protect you should your possessions be stolen, or an accident occur on your property.

Lastly, umbrella insurance is an excellent catch-all should the worst happen. All types of insurance have their limits, and should you find yourself in a situation where those limits are met and exceeded, umbrella insurance is designed to cover the overflow. Able to cover you during overseas travel, umbrella insurance is an excellent safety net should your initial fail-safes give way.