A new report from CCC Information Services Inc. (CCC) examines a numberof trends affecting the auto collision industry, as well as someaspects of property and casualty insurance.

Technology continues to be a huge change driver for consumers,insurers, repairers and the auto industry in general. Whether it ischanging how these players communicate, their expectations, repaircosts or the vehicles themselves, its impact is wide ranging,according to the 2017 Crash Course report.

Consumers are a driving force on several fronts – how they usetechnology affects their expectations of insurers and other vendorsthey interact with on a daily basis. Where they choose to live andwork, and how they commute between those two locales is changing asresidents seek more urban areas. Growth in urban areas issurpassing suburban areas, but almost 50 percent of Americans stilllive in the suburbs.

As the population in these areas increases, so do the number ofdrivers on the roads. Rural and urban interstates are seeing themost traffic growth. More drivers traveling at higher rates ofspeed also means more fatalities. According to the HighwayLoss Data Institute, there is a direct correlation betweenraising the posted speed limit and an upsurge in the number offatalities on these roads – each five miles per hour increases thenumber of fatalities by eight percent.

The report identifies a number of other factors that arechanging the auto, insurance and repair industries. Here is a lookat 10 of the major drivers.

1. Younger, more diverse and digitally connectedconsumers

Individuals from foreign countries accounted for 55 percent ofthe overall growth of the U.S. population from 1965 to 2015according to the Pew Research Center. This resulted in thepopulation increasing from 193 million in 1965 to 324 million in2015. Pew estimates that 51 percent of the immigrants arrived fromLatin America, and one-third from Asia.

For insurers, this influx means more possible policyholders whomay have different views on insurance, require some education ontheir risks, and want to engage through different sales and servicechannels.

The fact that almost 60 percent of Hispanics are millennialsmeans they have unique expectations as consumers compared to othergroups.

With millennials now comprising the largest generation of thegeneral population, insurers will find they are more independent ina number of areas than baby boomers or Gen Xers. A study byNovarica said millennials are more likely to research items beforepurchasing them; buy online more frequently; and prefer digitalchannels due to their speed, flexibility and ease of use. Socialmedia and chat options also matter to millennials, while thetelephone is still the preferred method of communication for olderpolicyholders.

2. Insurance, technology and claimsfiling

The use of digital channels also crosses over for millennialsinto the claims space. The Accenture Claims Customer Survey 2014 confirmedtheir preference for using these channels during the claimsprocess, with millennials stating that they would switch to anothercarrier if theirs did not provide this option.

Millennials also value advice and assistance during the purchaseprocess for insurance. Accenture found that 80 percent of theirsurvey respondents thought this was so important that they wouldconsider switching insurers within the following year if theirinsurer did not offer any type of guidance. They are also willingto pay for this type of service.

Using Internet of Things (IoT) devices to provide a morepersonalized service experience was also valued by those in theAccenture survey – 71 percent said they would be interested inhaving their claims submitted automatically by either their vehiclefollowing an accident or by their connected home if there was sometype of property damage.

(Photo: iStock)

3. It's all connected

The advent of connected devices like Amazon's Echo, Alexa andechodot; a range of appliances like video doorbells, thermostats,smoke and carbon monoxide detectors, smart lights, video cameras,cell phones and even children's toys provides new ways forconsumers to connect and share information (either on purpose orinadvertently).

Insurers and other businesses are using information from IoTdevices to personalize pricing and identify risks unique to apolicyholder. Who owns the information and how it can be used isstill being determined, particularly when it comes to protectingdata privacy. Many of these household items are also vulnerable tohacking since they do not require any type of security.

Related: 5 factors to minimize home-relatedrisks

4. The rise of online purchasing creates actual roadcongestion

With more consumers having online access through their computersand mobile phones, the option to purchase a wide array of itemsfrom non-traditional retail channels is growing. The result is anincrease in the amount of freight being moved by trucks and othertransportation services. The U.S. Department of Transportation(DOT) predicts a 40 percent increase in the amount of freight beingmoved in the next 30 years, while the actual value of the shipmentswill increase by 92 percent.

Trucks continue to be the preferred method to move freight andthe DOT projects a 44 percent increase in tonnage by 2045, withvalues increasing another 84 percent. Fleet traffic is also growingdue to the number of goods being purchased online.

The growth in urban areas and increase in the number of vehicles– both private and commercial – on the road, increases the risksfor all drivers. The Property Casualty Insurers Association ofAmerica found the population increasing in the 10 worst performingcommercial auto loss ratio states.

5. New car sales

Vehicle sales in the U.S. continued to rise, reaching a newrecord in 2016 with 17.539 million in total sales. CCC says 60.7percent of all vehicles sold in 2016 were light trucks andone-third were crossovers (an increase of 8.5 percent), whilemid-size cars showed a drop of 12 percent and compact car salesfell 5.2 percent.

Government-mandated safety and emissions equipment increased theaverage cost of a new car by as much as $5,000. The increase invehicle costs is also causing purchasers to spread out theirpayments over a longer period of time. The cost of a new vehiclewas also a primary driver in the number of leased vehicles, whichgrew to 32 percent for the first six months of 2016.

(Photo: Shutterstock)

6. Parts costs on the rise too

The increase in the overall cost of a vehicle also impacted theprice of replacement parts when it was involved in an accident. CCCsays that “historically, replacement parts have accounted for about40 percent of the total repair cost,” with labor, paint and otherfactors contributing to the balance.

Changes in technology (more complex lighting or cameras inbumpers) and the materials used in body panels is affectingreplacement costs for newer cars. Vehicles that are seven years orolder are less affected by increasing prices.

7. Auto claim impacts

Today's vehicles last longer than ever before, and with more newcars and trucks on the road, fewer are being taken out of serviceeach year. Add to this the forecast that the number of vehiclesaged 16 years or older is expected to grow to 30 percent or 81million vehicles by 2021 according to IHS Markit.

How does this affect auto insurance claims? CCC projects “theindustry would see an increase in newer age vehicle claims wheretotal loss frequency is lower, but repair costs are higher.” Inaddition, a larger number of older vehicles on the road could meanthat more vehicles are totaled when involved in a collision,further driving up the costs associated with total loss claims.

8. Negative equity in vehicle sales

The number of individuals actually purchasing a new vehicle witha trade-in has dropped from 50 percent in 2012 to 45 percent in thefirst nine months of 2016, according to Edmunds.com, whiletrade-ins for used cars have grown four percent to 31 percent in2016.

These trade-ins created negative equity for the purchasers andcould be one of the reasons so many are taking on longer car loans.A vehicle with negative equity involved in a total loss claim canbe more difficult to settle since consumers may not understand theimpact of depreciation on the value of their car. CCC says that“providing customers with information at policy renewal on thepresent value of their insured property could potentially help keepthem better informed, and avoid difficult surprises if there was atotal loss claim.”

(Photo: Shutterstock)

9. Vehicles as an IoT device

Vehicle technology is rapidly changing – new safety features,autonomous or semi-autonomous options, smart phone connections andother IoT devices are allowing manufacturers and insurers to gathermore information than ever about drivers and their habits. On apositive note, this can identify opportunities for new products andservices. A McKinsey study “estimates that nearly $1.5 trillion inadditional revenue could be generated from on-demand mobility anddata-driven services by 2030…”

There is the expectation that autonomous vehicles will be ableto communicate with each other at some point in the future,reducing the number and seriousness of accidents. Berg Insightestimates that the number vehicles equipped with OEM embeddedtelematics systems could increase from 12 percent in 2013, to 54.5million units in 2020.

All of this auto technology means that vehicles will be morevulnerable to cyber attacks and manufacturers are being forced torethink accessibility and security.

10. Impacts for insurers

What does all of this mean for insurers? Several things:

• Consumers want more choices and personalization across theirinsurance experience.

• They also expect greater service using their mobile devices –insurance technology matters to them.

• Increased access to data means insurers need to learn how towork with different types of unstructured data and keep all of thisinformation safe from hackers.

• More drivers on the road means increased claims, and newervehicles means that they will cost more.

• Technology is causing more distracted driving, and more, notfewer, accidents. Talking or texting while driving results in morecognitive distractions.

• There has been an increase in bodily and personal injury claimsas more miles are driven and more cars travel on interstatehighways.

• How consumers commute to work is changing. There are more ridingtheir bikes, walking and using ride-hiring options. Fatalities haveincreased for bicyclists and pedestrians.

• The cost of vehicle repairs will continue to increase asvehicles become more technologically complex, the cost of OEM partsescalates, and repair tools continue to change. According to CCC,the average cost of a repair in 2016 was $2,861, up 3.8 percentfrom 2015.

• In the next 10 years, crash avoidance technology could reduceauto claims by 7 percent, and by 12 percent in 2034.

The impact of digital technology means that insurers must adaptmore quickly than ever before. Their policyholders demand it andthe amount of information now available can be a key differentiatorin keeping insurers aware of new opportunities and risks in orderto survive in today's constantly changing environment.