Auto Physical Damage

Top Six Benefits IoT Offers the Automotive Claims Industry

March 15, 2019
4 MIN READ

Olivier Baudoux

Sr. VP of Global Product Strategy and Artificial Intelligence, Auto Physical Damage

Just one poor claims experience will lead more than 30 percent of customers to switch carriers within a year of the incident.1 How can insurers improve satisfaction during the claims process, make customers’ lives easier and reduce churn? The Internet of Things (IoT) may hold the answer. According to the technology media company IoT For All, the Internet of Things seems custom-made to meet the needs of the insurance market. “What could be more useful to an insurance company than accurate, real-time data?”2 Here’s a look at the potential advantages that connected devices interacting and exchanging data can provide to the automotive claims industry.

Six Ways IoT Benefits Auto Insurers and Consumers

1. Improve Efficiency

By allowing claimants and insureds to take the initial photos or videos of an accident and send them directly to a carrier, the consumer is now directly connected to the claims process. When submitted through a mobile app as part of the first notice of loss, those images could provide an enormous amount of information for a given claim, without the need for a company to have to wade through paperwork. Save even more time and labor if total loss can be determined without towing a vehicle to a repair shop.

2. Better Personalization

With access to more accurate personal information, IoT technology is a way for insurers to offer personalized products and services and differentiate themselves from the competition.3 This might take the shape of digital tools that make it easier for consumers to access and modify their policies. Or, imagine a scenario where a customer has had an unsatisfactory claims experience. Instead of waiting to see if that customer renews at the end of the policies term, the carrier reaches out proactively, acknowledges the negative prior experience and offers an incentive for renewing early.4

3. More Accurate Risk Assessment

Data from connected devices can be used to assess risk more accurately. Today, insurance companies make driver observations using onboard diagnostics (OBD) telematics and machine learning. With this data, insurance companies are helping consumers access more customizable rates based on a wide range of modern variables, “rather than just on traditional factors like where you live and what kind of car you have.”5

4. Reduce Risk

There is no question that distracted driving has increased significantly with the advent of smartphones. An estimated 60 percent of all drivers use their phones at least once while driving.6 According to the NHTSA, any non-driving activity you engage in such as talking or texting on your phone increases your risk of crashing. However, the monitoring of driving behavior through sensor feedback to mobile devices can actually decrease risk. Digitalist Magazine reports, “auto insurers can analyze a driver’s feedback in real time, sending data to a smartphone that can reinforce positive driving behaviors (e.g., speed limit compliance) or alert drivers in real time when risky or dangerous driving patterns are detected.”7 Claims are also reduced as a direct result of encouraging drivers to stay off roads during high-risk periods.

5. Cut Costs

By automating their existing business, carriers “can reduce the cost of a claims journey by as much as 30 percent.”8 Not to mention that autonomous driving technology (which would not be possible without IoT), has the potential to reduce the number of accidents and claims.

It’s been estimated that “pay how you drive” policies could result in as much as a 40 percent reduction in premiums for young drivers.7

6. Lower Premiums

As in-vehicle sensors and telematics systems become more widely deployed, insurers are offering usage-based insurance (UBI) with lower premiums. Nationwide’s SmartRide program tracks low-mileage drivers then rewards them with discounts up to 15 percent. It’s been estimated that similar “pay how you drive” policies could result in as much as a 40 percent reduction in premiums for young drivers.7 For those consumers searching for better pricing, telematics may be a key component achieving higher customer satisfaction. Thanks to the Internet of Things, connected cars have exploded in the last several years. It’s estimated that in 2021, over 80 percent of all cars manufactured will be connected.9 The entire automotive industry, from OEMs to auto insurers have witnessed a growing opportunity in this trend especially as it relates to the data generated by today’s modern vehicles.

Learn more about hazards and opportunities for insurers in the Internet of Things

 

1https://www.propertycasualty360.com/2016/05/30/digital-transformation-can-help-insurers-keep-cust/

2https://www.iotforall.com/iot-data-is-disrupting-the-insurance-industry/

3https://www.forbes.com/sites/blakemorgan/2018/05/16/heres-how-iot-will-impact-the-insurance-claims-process/

4https://www.mckinsey.com/industries/financial-services/our-insights/how-traditional-insurance-carriers-can-disrupt-through-personalized-marketing

5https://internetofbusiness.com/10-examples-iot-insurance/

6http://fortune.com/2018/04/10/distracted-driving-laws-vermont/

7https://www.digitalistmag.com/iot/2017/07/19/iot-lowers-costs-improves-risk-assessment-for-auto-insurance-industry-05221322

8https://www.mckinsey.com/industries/financial-services/our-insights/time-for-insurance-companies-to-face-digital-reality

9https://www.businessinsider.com/internet-of-things-connected-smart-cars-2016-10