Mobility has taken over every industry and has dipped its proverbial toes in the auto insurance industry as well. With GPS and accelerometers as high-tech accessories, mobile technology for the automotive industry too has come a long way and has many more miles to go. In an age where digitization and mobility is one of the bare necessities, most auto insurance providers are lost under heaps of paperwork. That’s the reason why the concept of auto mobility has shifted its focus to the insurance industry.
A combination of mobility solutions – telematics, analytics and communications, has eased the burden for auto insurers through information on driving style, collection of the same, analyses and reports that benefits all the stakeholders.
User-Based Insurance (UBI)
Insurance providers struggle with allocating premium amounts for their clients. Despite their best calculations, they have incurred losses. Traditionally, insurance companies calculate premiums based on driving records, vehicle use, previous claims, insurance scores based on credits and so on. Policyholders believe that these premiums are usually a fixed value.
Telematics technology will change the face of auto insurance through the usage-based insurance (UBI) pricing system where clients pay as per their usage, driving behavior that is. Pay-as-you-drive gives clients and insurers the freedom to calculate premiums based on not just driving records and vehicle usage but actual or real-time driving information.
Telematics can calculate every minute detail of the client’s driving style, including every hard brake, rapid acceleration, parking style, etc. Analytics will amalgamate, analyze and interpret this data, simplifying it to understand the driving patterns of the client and the risk(s) involved. This driving information will be shared with the insurance provider who can use the same to allocate the insurance premium amount for the respective client.
Vehicular insurance companies have realized the difference that real-time information makes in processing claims. With the ability to capture real-time data in the form of images, videos, driving information, etc., there will be adequate information to process a claim or to decide the insurance amount for a client. It will eliminate the possibility of modified data and increases the accuracy of information analyzed.
Time and Efficiency
Time is everything. Waiting for weeks for insurance agencies to process a claim can be painstaking. Insurance companies will soon provide every client a more personalized and expedited service. Mobile devices will enable evaluation of claims or consultation with clients in their comfort zone. In the case of an accident, real-time data can be captured in the form of videos or images, eliminating the possibility of improper claims or incomplete information, which can prove to be a loss for both parties. Automation will reduce paperwork and redundancy. At the same time, it will increase efficiency and accelerate processing of claims.
Management of Data
With the reduction of paperwork and introduction of technologically advanced analytics frameworks, managing vast quantities of data has become a child’s play. Analytics use complex algorithms and mathematical equations to organize, analyze and interpret huge volumes of information. The ability to retrieve relevant information instantaneously and accurately will save a lot of man-hours.
Mobility solutions for auto insurers come with additional services such as roadside assistance in case of an emergency, geo-fencing for parents to monitor their teenager’s driving, customer engagement to ensure the loyalty of the client, driving suggestions and other customizable options. Insurance companies will be able to go beyond their regular services for the client’s convenience.
Challenges of Telematics
However, there are a few concerns with telematics being used by insurers. Standardized regulations on data capturing and its process is yet to be determined. This raises concerns for loss of privacy or misuse of data. The other concern is when the client wants to switch to another insurance provider. The new insurer might not accept their driving data as the method of data collection is different. This could result in the client losing his benefits and has to start from scratch.
Nonetheless, telematics technology is relatively new and is yet to take over the market fully. Like any new technology, there will be glitches which will be fixed in due time. These challenges will not be an obstacle for auto mobility to be integrated with insurance, as the pros of auto mobility outweigh the cons. Gradually all insurance providers will largely depend on mobility solutions in order to develop their business and will become inevitable for auto insurance to use.