While attending a recent car show, I came across a reproduction window sticker displayed in a mint-condition 1966 Mercury Marauder.
What caught my eye was the list of standard equipment. Under the subheading "safety equipment" were such high-tech features as four-way emergency flashers and a driver's-side door mirror. These did have a marginal impact on accident avoidance, and they added little to the overall cost of repair if damaged in a collision.
In today's world, safety equipment is a lot flashier—and accident-avoidance technology has advanced exponentially in both functionality and cost. It includes a combination of:
- Telematics, a broad range of technology that captures and communicates raw vehicle data, which is overlaid with GIS map data like road type and speed limits
- Black-box technologies like on-board diagnostics parameter IDs (OBD-II PID codes that request data from a vehicle and are used as a diagnostic tool)
- Event data recorders (EDRs) that developed out of vehicle air-bag technology
The impact of these advances on automotive claims is significant—and will continue to be. While accident-avoidance technologies hold the promise of reducing crashes and the frequency of claims, the complex technologies in place in the modern automobile have great potential to actually increase claims severity.
Blind-spot and parking sensors, which carmakers are including as standard features on all vehicles going forward, are good examples of technology that will lower claims frequency but contribute to higher claims severity.
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 to repair.
HOW ACCIDENT-AVOIDANCE TECH AFFECTS CLAIMS-HANDLING
There's no doubt that telematics are changing both the industry and how auto claims are handled. Leveraging this data can potentially shorten the claims investigation by providing vital clues to driving behavior immediately prior to impact. They can also help assess driver behavior—and therefore driver risk. This will provide for more accurate underwriting and policy pricing.
In the meantime, on the front lines of claims-handling, claims professionals must become familiar with the changed frequency/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 add-ons equals 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. Replacing an outside remote mirror with blind-spot sensor can be more than $800. Other damaged accident-avoidance systems can cost up to $2,200.
Just as repair shops are taking advantage of online classes on fixing telematics and accident-avoidance systems, many companies are offering the same options for collision-claims handling. Claims professionals need to get up to speed—and fast.
Believe it or not, there are blogs and social-media sites that have telematics content you can check out on your smartphone. Just not while driving, OK?
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