Data, technology, usage-based coverage and new roles forclaims professionals are four areas to watch. (Photo:Shutterstock)

Insurers are constantly looking for new ways to utilizecutting-edge telematics. Whereas current technology used to be anovel but not a widely-used way to analyze risk, measure usage ortrigger claims filing, telematics has since become a standardoffering from many of the largest players across the insuranceindustry.

According to a report by McKinsey, the global revenue pool from car datamonetization could be as large as $750 billion by 2030.

What this tells us is that demand from consumers to haveconnected and intelligent automobiles is only going to increase. Asa result, we can and should expect that the insurance technologybeing implemented, and the models being used, are going to continueto evolve, giving way to exciting new opportunities and challengesin underwriting and claims processing.

Here are the trends I'll be paying very close attention to in2020 and beyond:

The importance of data

We live in a world where the inclusion of connected vehicletechnology in new cars is becoming standard practice. IHS Automotive predicts that by 2025 there willbe an estimated 2 billion connected cars across the globe, with theaverage car producing upwards of 30 terabytes of data daily. Thisdata will be largely generated from monitoring things likelocation, performance, efficiency, usage and safety.

For insurers, this data presents an ever-growing goldmine ofinformation just waiting to be leveraged — some of whichwe already are. But these opportunities will continue toexpand.

New ways to trigger claims

It's no secret that the claims side of insurance is driven byinsureds. Underneath the longstanding models most consumers areused to, insurers rely on policyholders to submit a claim beforeany action can be taken, leaving the insurer largely in the dark.However, with the help of new telematics technologies, be itdedicated devices, cameras or phones, accident detection isbecoming a lot smarter. But what exactly does this mean forinsurance professionals?

Well for one, the speed with which the claim is triggeredincreases significantly. Near instantaneous triggering of a claimnot only clues in the insurer to the what, when and where of thesituation, but can help them to utilize data to piece together thewhy. This, in turn, helps to simplify the process for all partiesinvolved and creates additional barriers to fraudulentactivity.

True usage-based and pay-as-you-go models

According to a study by Cambridge Mobile Telematics, upwards of75% of Americans want auto insurance premiums based on theirdriving behavior as opposed to more traditional factors like creditscore and demographics. So how do insurers adjust to providetailored, personalized insurance plans?

Enter true usage as a part of the more widely knownpay-as-you-go model. Whereas traditional premiums rely on factorssuch as driving history, the make and model of the vehicle, andmileage, we know usage-based insurance (UBI) is instead centeredaround how much, where and when the policyholder is currently usingthe vehicle. This often presents a win-win for both parties becausethe driver has an incentive to drive safely and get a lowerpremium, which in theory reduces the number of claims that have tobe paid out.

As it stands, usage-based insurance is somewhat general.However, as we gain access to real-time, specific data (throughGPS, OTA, vehicle cameras, apps, etc.) usage data becomes truer andtruer. The race to find when and where true usage can be optimizedfrom both a consumer and insurer's perspective remains to be seen —and I expect carriers to continue to get creative in the ways theydeploy and utilize technology.

The role of underwriters and adjusters

For some insurers, telematics is nothing more than a means toaugment conventional and over-complicated policies with usage-basedcriteria that are grounded in solid data. For others, it is a wayto add automation and precision into an often lengthy claimsadjustment process.

However, what is frequently missing in these conversations ishow telematics is positively changing the role of both adjustersand underwriters by providing them with the right tools to moreaccurately and confidently do their jobs.

By leveraging valuable user data when setting premiums,underwriters can not only be sure that they are issuing accurate,fair pricing to consumers, but also that they are offering top-tiercustomer service by helping policyholders to better understand thepricing structure and empower them to be part of the process. Foradjusters, integrating data into their work helps to more quicklydeploy the right people and resources, eliminates some of theguesswork that is involved and ultimately decreases the lifecycleof a claim.

Ready or not, technology and telematics data are changing theauto insurance industry (and its claims processes) as we know it.Those insurers who embrace these new technologies and implementthem in their platforms and ecosystems will be better suited tounderstand risk, offer the most completive pricing, mitigate claimslosses — and, ultimately, win over digitally-native consumers.

Andy Yohn ([email protected])is the vice president, product management and co-founder ofDuck Creek Technologies. He brings a solid mix of technical andbusiness skills together through his 30+ years of working in theinsurance automation industry.

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