In the past 10 years, more complex automotive technologies have made the roads safer for drivers, directly affecting insurance premiums. By harnessing big data, which is primarily used by companies to capture client information, insurers are now able to offer more accurate actuarial practices and better forecasting of risk trends.

And there is even more happening in the world of insurance technology.

Take a look at what you can expect technology to look like in the coming years and how it could affect the insurance industry.

The Director of Global Claims with Aon Risk Solutions, Jennifer Peck discusses the global claims landscape at the 19th annual America's Claims Event, June 17-19 in Austin. For more information, click here and use Code PC360AE & Save $100.

Telematics

Telematics combines computers and wireless technology to stream information across multiple platforms, which can then be used for analysis.

Think of a Fitbit as a telematics device, and as someone burns calories or walks so many steps, it syncs that information to their phone, computer and tablet for them to look at and analyze in the future.

Insurers use telematics in a very similar way.

In 2012, State Farm partnered with Ford via the car company's Sync system. Information such as how long the car went over 80 miles per hour or how quickly the driver hit the brakes is sent to State Farm to create a pay as you go policy, specifically tailored to individual drivers.

But telematics doesn't need to stop there, said Ernie Bray, CEO of ACD, a technology and claims solutions company based near San Diego, California.

"Beyond simply radically changing the dynamics of auto insurance rates, telematics and the wealth of data accumulated can alter the way auto claims are handled," said Bray. "First notice of loss could happen instantly without the customer even making a telephone call. Data from sensors would instantly report details including location, panels and parts damaged and potentially instant estimates. Furthermore, current black box systems for accident reconstruction are difficult to review and specialists are needed. With newer applications coming into the market, data will be easier to parse allowing adjuster access to information they never had before such as speed, location, braking, exact moments in time."

User-Based and User-Focused

Customers want more control over their policies. Not only that, they want more direct control of how things are done when processing claims.

The millennial and do it yourself (DIY) generation has forced insurance companies not only to alter their transparency and website navigations, but also overhaul on how they do business with their customers directly.

Insurance companies are starting to offer mobile applications that can help in offering quotes, reporting claims, accessing information and even allowing customers to summon agents to their home.

"Mobile technology has the potential to alter the entire claims experience," said Bray. "With connected vehicles and mobile solutions, policyholders could file claims, transmit live vehicle data, and capture images and loss investigation information all through enhanced mobile technology. This could speed not only the inspection of a vehicle which is just now beginning to become commonplace but can significantly speed up the entire claim for the handing adjuster. Much of the footwork done in the past through phone calls, police reports and traditionally adjusting could be enhanced with wealth of vehicle data."

Big Data

There is data everywhere on policyholders. Simply going through someone's Facebook page can reap an incredible amount of information. But, even though insurers aren't likely to sift through anyone's wall posts, there is a benefit to having a large amount of data stored on any given customer.

When partnered with telematics and mobile technologies, this data can help sharpen actuarial models by analyzing people's actions.

"Carriers could write shorter policy periods that will enable them to reward or non renew policy holders based on driving habits," said Bray, adding that they could write policies also based on when you drive and your yearly mileage.

On the Road

Self-driving cars will soon be available on the market, and the insurance industry will have to adapt to this driverless future.

With no drivers, will accidents happen as often? Will there be a need for auto insurance at all?

Tesla has already started offering automated driving systems in its cars, such as immediate brakes and driverless lane changing. Google's cars can analyze red lights, speed limit signs and have sensors in every part of the vehicle to detect a potential collision.

"We will see more in-car automation over the next five years," said Bray. "Technologies such as dynamic breaking, parking assist, and accident avoidance are becoming more commonplace as the technology improves. Vehicle owners will also have a lot more insight into how their cars work and how they drive."

But automation won't stop there. Government agencies have taken notice and are already looking to implement regulations that would require enhanced technologies in all cars.

"The National Highway Traffic Safety Administration wants to require all vehicle manufacturers to add two kinds of automatic breaking systems," Bray said. "The first is a crash-imminent braking system, which forces a vehicle to stop if sensors pick up a possible crash. The second is a dynamic breaking system, which adds force to the breaks if the driver isn't applying them hard enough to avoid a crash. These have the potential to reduce the number of accidents and ultimately reduce the costs of insurance policies."

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