Insurance Technology Revolution
Thursday, February 16, 2017
The evolution of technology has transformed so much of what we do in our daily lives yet it has been slow to bring any transformative change to the insurance industry, thus far. The insurance industry in many respects continues to operate much as it has for over a century relying on historical data, predictive modelling and the human intellect for subjective decision-making (underwriting). These two worlds are beginning to collide and a transformation is beginning to take shape. The question is how will the industry react and what will it look like in the future. Fintech, artificial intelligence and the digital experience are on the rise.
The most prolific introduction of technology thus far is the use of telematics--combining wireless technology and computers to stream information that is used to analyze a driver’s performance. This information includes how hard one applies the brake, how quick one accelerates, what time of day one is driving most frequently and at what speeds on drives. Currently, in Ontario the information is being used to better determine accurate insurance premiums tailored to the driving habits exhibited in a particular automobile. The future of telematics and the data collected may be able to alter the way auto claims are handled. Data from sensors may be able to notify the insurance company directly when you are involved in an accident, including details such as location of accident, parts of your vehicle that are damage and maybe even instant estimates. These advancements will allow for faster and more accurate claims handling and ultimately happier customers!
Across the pond the simply technology of dash-cams are the norm rather than the exception as they are here in Canada. Dash-cams can be critical in providing details of accidents in situations where witnesses are not available and/or conflicting reports exist. Recently, I had a client involved in an auto accident was faced with being charged, on the insurance, for being 50% at fault for the accident due solely to conflicting information given from both parties involved in the accident. This, combined with no independent witnesses coming forward caused the insurers to charge each driver with an at fault loss. During the investigation phase, we discovered that our client had an active dash-cam and footage existed that proved the accident was not his fault. Upon review we were able to have the at-fault charge against our client reversed with the third party being charged 100% at fault, thereby saving our client the cost of their deductible for repairs and a subsequent increase in premium. A $40 piece of technology saved our client thousands.
The biggest potential disrupter to insurance is artificial intelligence (AI). An American insurer, Lemonade, no people, no subjective human decision-making, is baes AI. AI will is the basis for self-driving cars. These vehicles are expected to be for sale in the next 5 years. As rapid advancements in AI is occurring, so are the questions that are being asked such as: with no drivers, will accidents happen as often? Who will be responsible if they do? What if the vehicles system is hacked and then cause an accident who is responsible? With new technologies there are so many unknowns good and bad. The one thing for certain it is an exciting time to be an insurance broker! Changes are happening regularly and looking forward to safer vehicles, ease of use and increased customer satisfaction. What the next 20 years will bring?
By Crystal Underhill RIB (Ont) CIP