but also keep them safer through crash
avoidance and self-diagnostic services.
“The bar has been raised,” explains
Gotsch. “We are starting to look at the
changes that are happening to the base
model. Consumers can buy a safe vehicle with the basics from a technology
perspective and basic features and crash
avoidance technologies.” Crash avoidance
technology has expanded to involve anti-crash sensors and back-up cameras, and
is projected to reach $9.9 billion by 2020
according to autonews.com.
While a connected vehicle is attractive
to customers from an infotainment perspective, for manufacturers and vendors,
the information captured allows them to
develop even more new products that will
appeal to all generations of drivers.
Consumers also expect their mobile
technology to sync effectively with their
vehicles and their satisfaction with their
vehicles is closely tied to how well their
technology systems mesh said a recent
J.D. Power study. The rapid evolution of
technology is forcing automakers to keep
up and Gotsch says that “auto makers
are more dependent on suppliers to help
introduce technology into the cars. This
is where the recall issues arise. The redesigns are happening more quickly and
there are challenges with competition.”
7. Auto repairs
All of these technological and safety improvements have affected how vehicles
are repaired and it is a far more complex
process than 10 years ago. The number
of replacement parts required when a
vehicle is involved in an accident has increased, as has the repair cost.
“There has been more rapid change
in frequency and severity of claims,” ex-
plained Gotsch. ” We’re seeing the impact
of buying more cars and traveling more
distances.”
CCC cites that for a model year 2003-
2007 Honda Accord involved in a colli-
sion, the average number of replacement
parts needed was 10, while a MY 2008-
20012 required 11. 6, and a 2013 model
needed 12.5. The average cost of a repair
was up approximately 8 percent, and the
labor costs and refinish hours required
increased as well. Gotsch cites the Ford
F-150 as an example.
“When it comes to the F-150, repairers
need special training and equipment to
stay current. Customers who had an accident five years ago would have a very different experience today. Repairers have to
decide how and when they will make an
investment to keep up with the changes.”
8. Business growth
Technology is also affecting how businesses grow and what will identify them
as a leader going forward. As technology
expands and allows consumers to operate
in the digital space, insurers are finding
that they must adapt to these changes to
meet customers’ growing expectations.
According to Strategy Meets Action’s
(SMA) Deborah Smallwood, “…Many in-
surers have arrived at the inevitable con-
clusion that becoming a digital insurer is
not only a necessary business imperative;
it is mandatory.”
Managing the claims process digi-
tally from first notice of loss (FNOL) is
becoming the norm as customers, par-
ticularly millennials, choose to interact
with insurers through social media and
electronically by email and texts. Some
insurers are developing processes that al-
low customers to use technology to cap-
ture the early stages of claims through
video apps. This type of innovation will
be crucial to facilitating the process for
claimants and meeting their increasingly
high expectations. Insurers who listen to
their customers will be better positioned
to create the products and services they
want and need.
9. Telematics
Technology is allowing insurers to gather
vast quantities of information and nowhere is this more apparent than in us-age-based insurance or telematics. The
access to real-time data allows insurers to
price policies according to a driver’s habits, whether they are good or bad. While
multiple surveys have shown that millennials are more comfortable with pay-as-you-drive insurance, there is far less
interest in other age groups. One of the
major concerns involves consumer privacy and who actually benefits from the
data collected.
“There has been a fairly decent adop-
tion of telematics,” said Gotsch, “many
carriers are introducing pay-as-you-drive
programs.”
And just because insurers have all of
this information doesn’t mean they can
use it. “There are regulatory limits as to
what can be used from a car. Insurers
could merge many data sources to get a
more accurate and fine-tuned picture for
underwriting. Some people will pay more
and some less,” she explained.
Protecting the information collected is
another concern because of the increased
risks regarding cybersecurity.
10. Data security
All of this technology and information
have value, as evidenced by the number
of high-profile cyber breaches over the
last two years. As more data is captured
via telematics, social media, the Internet
and other sources, protecting that information becomes more critical and challenging. Businesses cite a cyber breach as
one of their top five concerns in multiple
surveys.
There are also concerns that the collection and use of this data could infringe on
personal privacy and civil liberties.
According to the CCC report, Harvard
researchers predict that “privacy as we
knew it in the past is no longer feasible…
How we conventionally think of privacy
is dead.”
There are many issues that must be
considered as insurers collect and uti-
lize the data gathered. While it provides
insights for improving customer service
and reaching new customers, it will be the
ability to take this information and create
new products to meet the ever-changing
needs of consumers that will allow insur-
ers to remain competitive and profitable.
Technology permeates every aspect of
the insurance process, from online purchases to filing claims and communicating with insureds, to the products and
services insurers provide. Gotsch says
that as the market becomes more competitive there will be a greater focus on
customer satisfaction and a claims experience that meets the customers’ expectations of how they interface with insurers.
It will be imperative for insurers to identify and master the tools that will allow
them to thrive and survive in this techno-logically-driven environment.
