Filed Under:Claims, Auto

Accident-Avoidance Tech Drives Claims Trends

Telematics, EDRs and Black Boxes Affect Frequency and Severity

(Greg Horn is vice president of industry relations for Mitchell International. Previously, he served as vice president of material damage claims at GMAC Insurance.)

While attending a recent car show, I came across a reproduction window sticker displayed in a mint-condition 1966 Mercury Marauder. Full-size Mercuries from the 1960s are some of my favorite cars, so I spent a lot of time examining this one.

Parking and blind spot sensors are a good example of technology that will lower claims frequency but contribute to higher claims severity. Carmakers are making them a standard feature of all vehicles going forward. Parking sensors are located in the rear bumpers or the outside mirror of a vehicle. That’s ideal to both detect and prevent accidents before they happen, but also well-placed to receive the brunt of the damage. These sensors might mean fewer fender benders but those that do occur will be more expensive and complex to repair. 

High-Tech Rides
It is estimated that some 70 percent of 2011 vehicles are equipped with these technologies, which means a lot of auto claims involving some aspect of telematics technology will be coming your way. You might think only luxury vehicles like Volvo are equipped with the likes of these high-tech systems. It is true that Volvo has pioneered technology in the accident avoidance arena for several years now, particularly advanced driver assistance systems (ADAS) like autonomous emergency braking (AEB) as part of its City Safety system. Since 2010, Volvo has outfitted the XC60—as known as “the car that stops itself”—with this system, which is designed to address commonly-occurring low-speed, front-into-rear accidents like tailgating. 

The data that convinced European lawmakers came from Thatcham, Europe’s leading authority in collision repair research, which performs research similar to our Highway Loss Data Institute (HLDI). Thatcham performed a side-by-side study of the Volvo XC60 midsize SUV. Half were equipped with City Safety and half were not. The study concluded that property damage liability coverage claims were filed 27 percent less often for the XC60 with City Safety compared to other midsize luxury SUVs. HDLI performed a similar study in the U.S. and came to a similar conclusion.

While Volvo is known to be a leader in this area, other carmakers outside the luxury segment such as Honda, Toyota, Volkswagen, and Ford are also offering these systems in some capacity. Most offer them as trim options, but Ford is making this technology available to masses of blue oval drivers. Ford’s Active City Stop system, which was developed when Ford owned Volvo, is now offered as an option on the new Ford Focus—bringing AEB technology to millions of drivers. Active City Stop is just one portion of the company’s tech-packed driver assistance option, which also includes a lane departure warning, a lane keeping aid, driver alert, auto high beam, traffic sign recognition and a blind spot information system. And how do all of these systems work? In a word: sensors.

In the meantime, on the front lines of claims handling, claims professionals must become familiar with the changed claims frequency/claims severity dynamic that advanced accident technologies have caused. The risk for auto claims handlers and their claims-handling operations is that unfamiliarity with the new inner workings of vehicles and their accident avoidance means ignorance as to the real cost of time and labor needed to return a policyholder’s vehicle to pre-accident condition.

Accident avoidance systems are costly to repair. Take for example that outside mirror on the 1966 Mercury. Back in the day, it cost $16.75 to replace. In today’s dollars, that would be around $80. But replacing an outside remote mirror with blind spot sensor can be over $800. In addition, today’s telematics systems such as AEBs and other accident avoidance systems can cost upwards of $2,200. 

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