Blockchain Data and Car Insurance

The insurance industry has been working hard to stay up to date with modern technology. Already the industry is making use of predictive analytics to help create customized plans.

This raises the question of how blockchain technology can help the industry. A blockchain is a way to securely store information. The highlight of this method would be the inability to change data once it has been established. In other words – hacking and malicious attempts at alterations will not work.

Smart Contracts

Smart contracts are but one of the ways that blockchain data and car insurance companies have found a perfect balance. Contracts are a part of daily life – especially for insurance companies. A smart contract is simply a more advanced version of the original. 

In this instance, they are digitally signed and stored through secure digital means (blockchain data). All parties involved in the contract, including the neutral third party, can access this data.

Due to the digital nature of smart contracts, it allows for a certain amount of automation. A computer can look at the contract, and if the terms have been met, activate the appropriate next step.

Advantages of Blockchain Data

Many advantages come from blockchain technology, including the information already mentioned in the section above. Digital contracts allow for ease of access – both for the insurers and the insured.

In turn, this helps erase confusion, increase communication, and, more importantly – ensure accurate information. For example, fraudulent claims will dwindle, as all relevant data will be stored in one location. To put it another way, it’ll be simpler than ever to catch fraudulent claims. 

The customer will also have higher levels of protection, as the data will be stored with a neutral third party. This will help ensure that the insurance companies hold up their end of the deal and leave avenues for when things do not happen according to plan.

Insurance companies can use this ready access to data to store client details, going beyond what is typical these days. Data such as driving habits, traffic records, and accidents can all be easily (and safely) stored in one location. 

While that may not sound like a significant advantage – it is. All of the data being in one place would further encourage customized plans, which would once again benefit both parties.

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.

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.

 

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.