The great savior for mid-tier and smaller insurance carriers in the past decade has been the Internet. Regional insurers could suddenly do business in the same manner as national carriers, and customers found it nearly impossible to distinguish between the two.
Alas, life rarely stands still—particularly when it comes to finding ways to do things quicker and less expensively than your competitors. Larger competitors now are finding even more ways to operate effectively through the use of predictive modeling.
Telematics, one form of modeling, has become a game-changer for insurance carriers operating in the Personal Auto line. Soon, it will become impossible for those without this technology to compete with larger carriers for the good drivers of the world.
Towers Watson recently issued a report on predictive modeling among P&C insurers and reported some incredible data: When looking at their bottom lines, 83 percent of carriers surveyed report a positive impact on rate accuracy through predictive modeling.
If that wasn't enough, 76 percent report a positive impact on loss ratio, and 73 percent report a positive impact on profitability.
The race to use telematics will likely be a quick one. Informed drivers who realize they can get better rates because they have been and continue to be good drivers will seek out those companies that offer telematics, while competing companies that don't will be left behind. Which carrier do you want to be?
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