18 | MAY 2019 | Claims Magazine |
A move away from third-party devices
and toward embedded telematics means
vehicles themselves — both personal and
commercial — are becoming the conduits
of data back to the insurer, offering benefits for policyholders and insurers alike.
Technology yields better data
One of the biggest recent disruptions
in the insurance industry is a move toward in-vehicle data collection by original equipment manufacturers (OEMs),
who recognize a potential opportunity
to monetize valuable consumer data.
Over time, third-party devices that plug
into a car’s diagnostic board are being re-
placed by cheaper and more convenient
smartphone-based solutions, which will
soon give way to technology embedded
directly within the vehicle. This embed-
ded technology provides better, more
accurate data — a potential goldmine of
Until recently, this valuable data had
largely only been leveraged by personal
lines insurers. But the massive shift in
telematics now allows insurers to use it
for commercial lines — for claims, FNOL
and fraud detection. Further, companies
like Progressive are using telematics to
support electronic logging (ELD) of driv-
ing data for small interstate fleets, as well
as tracking the radius of vehicle travel
and time of day driven. This, in addition
to the use of driving scores to provide
commercial drivers with real-time data,
encourage them to improve their driving
— which can reduce risky driving events
by as much as 55% according to a U.S.
Department of Transportation study.
OEMs, insurers and related industries
must all carefully navigate privacy laws on
a state-by-state and country-by-country
basis to determine which personal driver
information they can track and how long
they can store data, but P&C insurers are
well-positioned to provide real customer
value and drive growth with UBI.
Applied to auto insurance, telematics
can be as simple as tracking the number
of miles a policyholder is driving or as
advanced as tracking behavior — such
as driving events like hard braking and
cornering, the number of intersections
a driver typically crosses within a given
time frame and even what time of day
they travel most.
While data privacy remains a sensitive
issue, UBI has clear benefits for both policyholders and insurers as data becomes
more robust and is available in real time.
Key advantages for policyholders include
safety, convenience and cost savings.
For example, in the case of a crash,
telematics sensors can instantly notify a
customer’s insurance company, while con-
currently sending assistance and emer-
gency vehicles to the crash site as quickly
as possible. Because telematics collects
very detailed information, insurers can
also connect with policyholders imme-
diately after an accident, pushing links
or apps to their smartphones so they can
capture photos or videos of their vehicle.
For insurers, telematics-driven UBI
also helps paint an accurate picture of
exactly what happened in a crash, which
helps prevent fraud. In the case of an accident, it allows for a better estimate of
damages and speeds up the claims process. Insurers can take data from a vehicle
Auto Technology Personalizes
the Insurance Experience
The hyper-connected cars of today not only provide amenities like internet access, onboard entertainment and turn-by-turn avigation to drivers and passengers — they offer a wealth of
data that is drastically reshaping the auto insurance landscape. As
technology improves and driving data becomes increasingly accurate,
usage-based insurance (UBI) policies are gaining popularity.