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. 

 

Pet Insurance

amigo mga pet insuranceIf you have a scaled or furry friend in your life, you may have briefly considered taking out an insurance policy to cover your pet’s potential injuries or procedures. Most people opt not to take out a health insurance policy for their pets, but you may not have considered just how valuable that insurance policy could be to saving you money, stress, and your pet’s life. If you’re even considering pet insurance, here’s some information to consider.

Firstly, talk with a trusted veterinarian. Usually, vets can give sound advice about which insurance agency will offer you the best deal to get you the most coverage for the most reasonable price. They are a non-partisan source for information, since they don’t make any money on insurance sales. The vast majority of vets will also take any insurance, so you won’t have to worry about in-network care providers the same way you have to with people insurance.

Vets are also well-versed in the different breeds of pets and the kind of care each kind of dog, cat, bird, or reptile will need. For example, pugs are highly prone to cardiovascular and pulmonary issues, so you may need extra coverage to keep your pug healthy at a reasonable cost. Consult your vet on what species or breed specific issues may need extra coverage for your pet.

Think about the cost versus benefit of the cost. On the one hand, you could be paying a decent amount of money as your monthly premium. However, consider how much the cost would be defrayed in the event of an emergency or accident. Amigo MGA has already written about high versus low deductibles for human health insurance and car insurance, and you may want to do the same calculations for your pet.

You’ll also want to do the preemptive work to keep insurance rates low. Make sure your pet stays healthy by grooming it regularly and taking it to the vet for regular check-ups or to consult if something seems “off.” Doing the leg work on the front end will keep costs low in the future, just like with human health insurance.
While still being cost-conscious, you don’t want to skimp out on protection for your family pet. In the event of an emergency or just regular health issues, you want peace of mind knowing that it won’t cost you an arm and a leg and that your pet will be happy and healthy again in no time.

Self-Driving Cars and Auto Insurance

amigo_mga_self_driving_cars_and_auto_insuranceAuto insurance agencies know a lot about traffic, how it works, what causes it, and how to best ensure drivers based on factors like age, college GPA, income, and color of the vehicle. Traffic engineers know well that no matter what they do to direct and control traffic, human error is hard to account for. For example, we have the classic dilemma of when to merge in the event of a road closure or construction. Do you merge over as soon as you see that the road is closing soon, or do you wait until your lane is cut off to merge?

In his landmark work on traffic engineering entitled, Traffic: Why We Drive the Way We Do (and What It Says About Us), Tom Vanderbilt helps readers understand the nuances of what makes drivers behave the way they do and how city planners, construction crews, navigation apps, and drivers themselves try to account for this in their day-to-day lives. From an unexpected demonstration to someone distracted by a song on the radio, it’s hard to account for human error when making plans that have to do with transportation.

What if we take the human driver out of the equation, though? For the most part, auto insurance covers the damage drivers cause to their own cars and to the people, vehicles, or other property involved in the accident. It’s been demonstrated that self-driving cars are not immune from getting into accidents and causing havoc. In 2016, a self-driving Tesla car was involved in a fatal accident in Florida. Who, then, bears the responsibility?

Warren Buffett, who owns Berkshire Hathaway, which recently acquired Geico insurance, believes that the onus of protection will shift from drivers to those who manufacture and program the self-driving cars. Already the state of Michigan has passed laws that require the automakers to assume responsibility for any accident that occurred because of a self-driving car.

Since it’s common knowledge that most of the traffic issues that plague our day to day lives are the results of human error, many believe that automation will reduce the instance of accidents. However, if automakers are required to bear the responsibility for insuring these autonomous vehicles, they may experience a disincentive to produce them, since the costs would swell as the technology’s bugs get worked out. Thus, the speed of technology development would plateau and human-caused traffic accidents would continue to occur.

There are a lot more questions than answers right now regarding what will happen as cars are no longer controlled by fallible people. Insurance companies, automakers, and legislators will continue to debate where the burden belongs, but in the meantime, auto insurance will continue to cover must human error.

What you need to know about Travel Insurance

Amigo MGA | What you need to know about Travel InsuranceIf you plan on taking a trip any time soon, you likely get a pop-up at the bottom of your ticket purchase screen asking if you want to purchase insurance for your mode of travel. As spring break and summer break rapidly approach, you may be planning on taking a trip abroad, and you want to make sure you’re protected against theft, identity fraud, injury, transportation problems, and in rare but serious cases, shipping your body back to your family. Travel insurance is an important aspect of your safety overseas, but you need to know exactly what you’re paying for and what your coverage buys.

If you’re planning your trip via a travel site, whatever you do, don’t blindly agree to whatever insurance they’re offering you. A recent article detailed how many people will just accept the policy the travel agency offers, but that shopping around could provide better coverage for a better price.

Most standard life and property insurance policies don’t quite cover anything that happens while you’re away from home. Especially if you fall ill while you’re outside the US, your health insurance will be completely useless to you. Additionally, any luggage you lose in transit likely won’t fall under your standard theft insurance, so you could be naked and afraid once you land in your destination. Travel insurance isn’t required by any stretch, but it sure could make your life easier in the event of an unforeseen incident.

Firstly, of course, is the insurance that covers your transportation. In the event that your flight is cancelled or traffic makes you miss your train, you’ll want to use some of the money you spent on your ticket to purchase a new ticket. This is a decision you need to make on your own. The options listed on the transportation’s sites are usually fine, but again, you may have better options elsewhere.

You also need to take into account whether you have any preexisting medical conditions. In one infamous story, a man in the UK had a heart attack while traveling to the US, but his insurance refused to cover the medical expenses because he failed to disclose that he had experience heart failure a few years prior. Insurance is especially important if you do have any genetic conditions, medical problems, or risks of recurring issues, but by the same token, it’ll take some negotiating with your provider to ensure that all your possible issues are fully covered.

As it turns out, some credit card companies include travelers insurance in their fine print. According to a USA Today article, depending on your policy, some credit card companies will reimburse for items lost in travel, sudden flight cancellations, or trip “interruptions” like illnesses or labor strikes.

You may be tempted to rely on your credit card policy for travelers insurance to pinch pennies, it’s not a catch all, and there are some important instances that they won’t cover. As reported in ITIJ, “credit card coverage falls short in a few areas: robust trip cancellation coverage, medical and evacuation coverage, pre-existing medical conditions, card limits and covering other travelers. CSA explained that only around 15 per cent of credit cards offer travel cancellation insurance and most trip cancellation or interruption protection offered by credit cards is limited to a handful of reasons such as illness, injury or death.”

Traveling should be fun and stress-free, but to make sure that’s the case, you need to ensure that any potential problems are covered by a policy that takes care of any injuries, theft, or transportation issues that could arise.

Insurance & Your Engagement

1In the wake of Valentine’s Day, Facebook is flooded with happy couples who’ve recently become engaged and need to start making wedding plans. With that new ring, though, comes a flood of insurance questions and potential policies you need to consider. Below are a few ways you can protect yourself, your spouse-to-be, and your big day.

Ring Insurance: Many insurance agencies offer policies specific to fine jewelry, including precious metals, rare gems, antique pieces, and famous costume pieces (for example, Beyonce’s golden crown). Some will even insure “smart” jewelry. For engagement rings in particular, it’s important to find a policy that protects you from damage, theft, and loss, as all of these are common for such a small yet valuable piece of jewelry. You can often insure the ring directly from the jeweler from whom you bought it, or you can take out a policy on it separately on your own insurance plan. Especially for beach proposals, engagement rings are easily lost in the sand, in a beach towel, or to the vast ocean, so be sure to protect yourself against losing such a priceless investment.

Wedding Day Insurance: Weddings are expensive, and the last thing you want is to lose all the money you put down because of an unforeseen accident. If, for instance, there’s inclement weather, a parent suddenly becomes very sick, or the venue abruptly becomes unusable. Before purchasing insurance, check with each vendor, as caterers often have their own insurance. Depending on your policy, wedding insurance usually covers the site, the weather, vendor no-shows, sickness, and military deployment. Unfortunately, though, wedding insurance policies don’t usually cover cold feet, so if you or your betrothed have a last minute change-of-heart, you may be out of luck covering the costs of the wedding.

Auto insurance: Once you’re married, you may combine your auto insurance into one policy. For couples under the age of 30, you could receive up to a 25% discount for getting married, since it demonstrates responsibility. Check with your insurance provider about the impacts of potentially combining your policies.

Health Insurance: There are more options for how to deal with health insurance once you’re married, and there are a lot of factors to consider. You could each just keep your individual insurance policies, or one of you could join the other’s policy. This might be tedious, but you and your betrothed need to sit down and consider the details of each of your insurance policies and how adding a spouse would affect the deductibles (which I’ve written about before) and out-of-pocket costs. You also need to consider what would happen if you decide to start a family and whose insurance would handle such an addition better.
There are lots of ways to protect yourself, your stuff, and the person you love when it comes to planning for a future together. Always read the fine print when deciding on a policy, and always think long term.

Insurance and The Gig Economy

Insurance & The Gig EconomyThough the name has been hotly contested, there’s no debate that the gig economy, or the private-citizen-to-private-citizen trade of goods and services, is alive and thriving. From cars to dwellings to clothes to furniture to even friends, app developers have helped facilitate the expansion of a market that lets regular people sell or rent their stuff or labor to strangers online. On the whole, the results have been wonderful. Sellers are finding new, creative ways to bring in extra income, and buyers are happy to spend extra money for a better, more personal experience.

Some dubious scenarios surrounding accident and theft coverage for the sellers in these situations, specifically regarding who’s on the hook for costs, have arisen. One woman publicized a horror story of an AirBNB gone bad when she rented her beautiful condo and returned to find her house trashed, her stuff ransacked, and her memories scattered all over. A man who took odd jobs on Airtasker discovered while he was on a gardening job that the house where he was worked had asbestos. These incidents and more beg the question: Who’s on the hook for insurance in the gig economy?

Insurance agencies got hip to Uber quickly and discontinue the policy whenever a driver has the app open, although Uber allows a small amount of coverage while they’re on the app. AirBNB used to offer nearly no protection whatsoever, but now offers some protection from rare vandalism and theft. Airtasker offers a little insurance to its workers as well, but its policy has a lot of caveats as to which tasks it will offer worker’s compensation for; for example, the business will not offer insurance coverage to building jobs, fitness training, taxi driving, and other “risky” jobs.

The classic argument that the apps offer in court when they’re sued for insurance liability is that the people who use the app do so willingly knowing full well that the coverage is minimal. Furthermore, if a person were doing handiwork for a neighbor without the facilitation of the app, the worker would not expect any sort of compensation in the event of an accident.

Still, there’s a clear void in the market for who’s responsible for accidents that are incurred in the gig economy. Welcome Bunker, an insurance agency that handles the leg-work for freelancers, independent contractors, and other who don’t have employers to cover their risks. Put most simply, Bunker allows contractors and employers to get on the same page regarding required insurance and proof of coverage. While it doesn’t necessarily offer insurance, it does ensure that the employee is covered enough to prevent suits on either side. While the site is still rather young, it’s starting to help fill the coverage void for non-traditional workers.

As the gig economy grows and diversifies, insurance will continue to play catch-up, but if you’re participating in the gig economy either as a buyer or seller, you need to know what you’re covered for on your personal policy and the company’s policy.