High-tech, connected cars are increasingly collecting valuable data that insurers can use to streamline the claims process after an an accident.
The number of smart cars traveling on American roads is on the rise. In fact, over one third of new cars sold in 2015 were already connected to the internet. By 2020, that number is expected to reach 98%. And, in just seven years, 100% of new cars sold will have internet connectivity.
For auto insurers, smarter cars have been something of a double-edged sword. On one hand, repairing these technologically advanced vehicles has caused repair costs to soar, pushing up insurer payouts while simultaneously increasing premiums for policyholders. On the other, insurers are realizing the potential value of data collected by connected, smarter vehicles.
Indeed, information logged by these cars before, during, and after an accident promises to streamline the claims process. When you consider the potential for reduced underwriting and administrative costs, smarter cars may start looking even more attractive for insurers and consumers alike.
Smarter Cars, Quicker Claims Resolution
To date, insurers have touted telematic devices mostly as a means for drivers to reduce their rates by documenting safe driving habits. As more and more cars come with this smart technology, however, insurers will pull the information stored in these sensors to complete claims.
Currently, insurers have to review numerous third-party accident reports and damage estimates before determining fault and paying a claim. It’s a lengthy, labor-intensive process that may lead to policyholder frustration, as well as higher insurer expenses as the parties involved may dispute the findings.
Going forward, electronic data recorders (EDRs) — also known “black boxes” — will record details about accidents. When a crash occurs, those devices kick into gear, pinpointing the car’s location, assessing the severity of the crash, and documenting the speed and direction of the vehicle at the time of the incident.
Once that information is streamed back to the insurer, the company can dispatch medical assistance (if warranted by a reading indicating the impact was forceful enough to trigger the airbags) or notify a nearby towing service.
Almost immediately after the crash, the claims process can begin with adjusters working through information provided by connected cars. By combining factual data with other key factors such as weather and traffic patterns, insurers can more accurately understand what happened and why.
In addition, data from an accident can be compared against the policyholder’s claims history as well as the insurer’s own database to uncover fraudulent submissions. As insurers analyze and compile data from a growing ledger of connected cars, they can judge what the typical claim payout should be when collisions result in certain types of damage.
Comparing an accident report to similar previous incidents enables insurers to spot higher-than-usual claim costs or flag other out-of-the-ordinary activity. By standardizing the way that claims payouts occur — and by avoiding potentially fraudulent activity — stakeholders throughout the industry can save.
Lower Claim Costs in the Future
By eliminating multiple in-person inspections and other time-consuming claim settlement procedures, insurers can cut down on per-claim expenses. Faster claim resolution also prevents policyholders from bolting to another company after an unsatisfactory experience, making it easier for insurers to hold onto existing customers.
Reaping the rewards of faster claims servicing requires that insurers take several steps, however — the first and most important of which is obtaining permission from policyholders to access automotive data. Next, they’ll need to shore up their in-house technological capabilities and expertise to integrate data from connected cars in the claims process. Since data-collection technology is often installed by car manufacturers, insurers will also have to pursue data-sharing partnerships with those parties.