Upcoming Insurance Technology Trends

Will New Technologies Change Car Insurance in the Future?

Smart Car
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Technological change is happening rapidly. Companies, as well as the goods and services they sell, are becoming more connected to the outside world—and more adaptive to the individuals using them.

While much of this technology has obvious positive impacts, you might be wondering how all of this change will impact the car insurance industry. There are several trends, tools, and companies that you should be aware of when evaluating car insurance policies.

Learn about upcoming insurance technology trends and the impacts they will have on consumers and companies alike.

The Power of the Internet

Many newer cars have built-in safety technology, and some even have semi self-driving options. In the coming years, more and more vehicles will communicate with one another on the road, with the aim of reducing traffic accidents and fatalities.

Some add-on devices allow insurers, fleet operators, or parents to collect information on driving habits. Here's one example of how technology is learning about our driving habits and using that information. The TRUCE mobile app tracks driving behavior and restricts the driver's technology use while the vehicle is in motion.

According to a study by McKinsey, nearly $1.5 trillion in additional revenue could be generated from on-demand mobility and data-driven services by 2030.

Smartphones Rule

Most Americans own a smartphone, and insurance companies are scrambling to keep up. For many in the U.S., their smartphone is their primary connection to the digital world.

Many insurance companies are rushing to develop user-friendly apps and websites. But only those insurance providers who have invested in long-term digital strategies will be a cut above the rest and be able to distinguish themselves in the crowded insurance marketplace.

For insurance agents and salespeople, jumping on this trend will mean more access to apps that help with a smartphone-accessible rating, quoting, what-if analysis, and selling to consumers. For the insured, this will mean the ability to talk to insurers in real-time.

Making Better Use of Connected Technology

More and more car insurance companies will soon start offering usage-based car insurance (UBI). In a UBI plan, a mobile phone app or other sensors will track how you drive and calculate the rate the company charges you accordingly. This usage-based insurance will also be affected by when, where, and how you drive, with more discounts for avoiding accidents.

And it’s not just established companies that will benefit from this trend—more and more startups will be getting into the UBI game. Many smartphone apps already allow individuals to compare quotes from different companies. Others, like Metromile, offer a flat base fee and then charge users based on how many miles they drive.

And still, others use smartphone GPS technology to provide insurers with tracking and vehicle health reports. Some may even provide tips to drivers: TrueMotion, for example, measures distracted driving, rates each trip, and shows where drivers have room for improvement. They claim to have reduced distracted driving by up to 75% for its users.

Important

Many insurers are looking to provide more innovative services to their customers. Useful and user-friendly apps, custom pricing models, and data-centric strategies will be critical for success in the car insurance industry.

It’s a Buyer’s Market

Gone are the days when paying an arm and a leg for car insurance was an individual’s only option. Between car-sharing services such as Uber and Lyft along with better public transportation infrastructure in larger cities, even driving a car is now optional for many people.

But for those who drive, a variety of innovative applications, technology, and pricing models means competition is fierce.

In addition to providing users with better data on their own driving, technology allows drivers to have fine-tuned expectations of how much they should be paying for car insurance. This is based on their driving behaviors, vehicle make and model, the city in which they live and work, and their other traditional risk factors such as traffic tickets, age, and more.

Reaching Younger Generations

By 2019, more than half of Americans were millennials or younger, and millennials along with the younger Generation Z are changing the rules of the game.

In addition to growing up as digital natives, these generations are also pickier: They tend to research potential purchases and investments much more than previous generations do before spending money on them. They also make a large percentage of their purchases online, and they are more likely to prefer texting, chat, and using social media over actually picking up a phone when conducting business.

This reality means that to attract and maintain their client base, insurance companies will have to be more sensitive to the unique wants and needs of younger generations—including more integrated and easy-to-use technologies, as well as providing more transparent information on products, services, and pricing.

Tech-Empowered Insurance Agents

All of this may make it seem like individual insurance agents are well on their way to being replaced by sensors, robots, algorithms, and machines. In reality, these innovative technologies will empower the insurance agent to more efficiently serve their clients using the latest and greatest data and technology.

This can actually lead to more efficient and productive conversations between agents and their customers, and ultimately, better solutions for everyone.

Advicerobo, for example, a company that reduces risks for insurers by using data to create wildly in-depth profiles of individuals. It allows the insurance company to reduce their risk of being defrauded and also evaluate the insurance-worthiness of individuals.

This is done through a combination of psychographic factors—including their “financial attitude,” loyalty, social media use, relationship status, job, gender, and risk aversion, among other things.

Note

This technology also helps screen insurance applications and claims for fraud, saving everyone time and money.

What About Privacy?

Some people may be fully on board with all this technology and the cost-saving tools; others may be thinking it all seems like an invasion of privacy.

The future definitely points toward insurers knowing more about us as individuals, and the increase in auto technology may make cars and data centers more vulnerable to occasional cyber attacks. However, it will also mean more transparency from our insurance companies, along with better pricing and safer driving.