Upcoming Insurance Technology Trends

Upcoming Insurance Technology Trends

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Insurers Will Make Better Use of Connected Technology

More and more car insurance companies will soon start offering usage-based car insurance (UBI). In a UBI plan, a mobile phone app or other sensor will track how you drive and calculate the rate the company charges you accordingly.

 This usage-based insurance will also be affected by when, where, and how you drive, with more and safer driver discounts for avoiding accidents.

And it’s not just established companies that will benefit from this trend — more and more startups will be getting into the UBI game. Many smartphone apps already allow individuals to compare quotes from different companies. Others, like Metromile, offer a flat base fee and then charge users based on how many miles they drive. Another, Cuvva, is car insurance marketed to infrequent drivers. Alternatives also use smartphone GPS technology to provide insurers with tracking, vehicle health reports, and tips for users. Many of these will benefit both consumers and insurers: one, TrueMotion, measures distracted driving, rates each trip and shows where drivers have room for improvement and claim to have reduced distracted driving by up to 75 percent with its users.

Mojio is another that has already partnered with big names like Google, Amazon, and Microsoft — the technology is a leader in the future of connected car services.

For those who are looking to provide more innovative services, useful and user-friendly apps, seriously custom pricing models, and data-centric strategies will be critical for success in the car insurance industry.

Pull Don’t Push

In many industries, “push” advertising has been dominant for decades. Push advertising force-feeds potential clients with flashy and catchy advertisements and marketing — think Time Square brightly lit by ads galore. More and more, the car insurance industry will be dominated by those who truly understand what it takes to “pull” customers in (or away from a competitor) rather than “push” them towards a product or service. Push is about exposure — pull is about understanding the unique needs of individual potential clients in a broader context. In order to be successful in the new era, insurers need to truly understand their client’s lives. Insuretech can help by providing data and context to individual drivers and the ecosystems in which they exist. This, in turn, will allow insurers to better understand the unique needs of clients — and in turn provide better, more individualized products and services.

It’s a Buyer’s Market

Gone are the days when paying an arm and leg for car insurance was an individual’s only option. Between car sharing services such as Uber, Lyft, and Gett and better public infrastructure in the nation’s largest cities, even driving a car is now optional for many people. But for those who drive, innovative applications, technology, and pricing models mean competition is fierce — and buyers are driving more than just their own vehicles. In addition to providing them with better data on their own driving, technology allows drivers to have fine-tuned expectations of how much they should be paying for car insurance based on their driving behaviors, vehicle make and model, the city in which they live and work, and their other traditional risk factors (like traffic tickets, age, etc).

Highest Auto Insurance Premium Increases Per Crash: Congrats DC

Highest Auto Insurance Premium Increases Per Crash: Congrats DC

Auto Insurance

Auto insurance companies portray themselves as friendly and forgiving in television commercials, but they are less friendly than you might think. After filing just one claim, car insurance premiums increase by an average of 41.81%, according to an annual study by insuranceQuotes and Quadrant Information Services. Just how much insurance rates are increased depends on the state where you live

States with Highest Rate Increase After one Claim

  1. New Hampshire: 65.9%
  2. California: 63.2%
  3. Rhode Island: 61.7%
  4. Massachusetts: 60.9%
  5. Iowa: 56.5%

States with Lowest Rate Increase After one Claim

  1. Kentucky: 19.4%
  2. Tennessee: 20.1%
  3. Michigan: 22.2%
  4. Oklahoma: 23.4%
  5. West Virginia: 27.8%

New Hampshire is in a league of its own. Although the state’s average annual premium of $733 is below the national average of $841, it more than makes up for it with a 65.9% rate increase after filing one claim, the highest percentage increase in the nation. After the rate hike, premiums in New Hampshire average $1,216.

For overall premium cost, however, Rhode Island has New Hampshire beat. After just one claim, America’s smallest state has the seventh-highest average premium at $1,066 thanks to the third-highest percentage rate increase of 61.7%. That means drivers in Rhode Island will pay an additional $657 per year on car insurance after one claim, the highest increase in the country dollar-for-dollar.

When looking at our chart, an interesting pattern emerges—all of the largest increases in premiums occur in states that start out with higher premiums, even without any claims having been filed. In most of the states where the premiums start out below the national average, their average rate increases are also lower. Unfortunately for drivers in states like Texas (53% increase after a claim) and Connecticut (43.8%), their premiums start out high and only get worse. Other places, however, start out so low that, even though they have a big jump after a claim, their premium still isn’t too bad compared to some of their neighbors.  In Iowa, for example, our hypothetical driver starts out with a premium of $572. After a claim her rate is increased by a whopping 56.5%, but she’s still only paying $895 every year.

Louisiana auto insurance rates increase, second highest in the nation

Louisiana auto insurance rates increase, second highest in the nation

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BATON ROUGE – For a fourth straight year in a row, Insurance Commissioner Jim Donelon says residents in Louisiana can expect increases in their auto premiums. In some cases, it may be a double-digit increase.

The increases can be blamed on a host of factors that ultimately boil down to the auto insurance industry not being a profitable business right now.

Lou Fey is the President of the Professional Insurance Agents of Louisiana and Chairman of the State Property Casualty Commission.

“Our report to the Governor said the auto insurance market is in crisis,” Fey said. “It’s not like it’s not noticed by anybody. We also know what would fix it, but it’s getting the legislature to do that.”

Fey said currently, Louisiana is the second most expensive state for auto insurance in the nation. Michigan is number one.

“You’ve got technology making cars safer, and accident avoidance systems, lane assist, all those kind of things,” Fey said. “You should see rates going down, but we are seeing them going up due to distracted driving.”

Fey believes rates are going up due to distracted driving and the need for tort reform in Louisiana. According to statistics from the National Highway Safety Commission, there were 3,331 deaths across the nation last year due to distracted driving. It’s why professionals are proposing a bill in the legislature that would make it illegal to hold your phone in your car unless you’re using hands-free technology.

“It bans the handheld manipulation of portable electronic devices while the car is in motion by the driver,” Fey said. “In other words, put the cell phone down.”

All auto insurance increases must be approved by Insurance Commissioner Jim Donelon. Donelon said before an increase is granted, a team of actuaries analyze numbers submitted by the insurance companies. According to Donelon, very seldom does his office approve the hikes his insurance companies request.

“We can politically suppress rates and just say ‘no’ and ignore the numbers and justification that our staff says is legitimate,” Donelon said. “We can do that, and it has been done in the past, and they can leave our state.”

In the past two years, five companies have left due to the unprofitability of the auto insurance industry here: 21st Century North America Insurance Company (part of the Farmers Insurance group) (2016/2017), ACCC Insurance Company (2017/2018), Auto Club Family Insurance Company (2015/2016), Direct General Insurance Company of Louisiana (2018) and Equity Insurance Company (2017).

Donelon said more companies writing policies increases competition.

Nancy Taylor is a Baton Rouge driver who received sticker shock when she received her renewal in the mail. Her policy increased nearly $300 for six months. Taylor was involved in a minor fender bender that caused no damage to either vehicle, but the driver of the car she tapped claimed bodily injury. Her accident was forgiven and not reflected as part of her $300 increase. However, she said her insurance company paid the person in that minor crash $2,500.

“I think there needs to be a database whereby if you get into an accident and collect insurance money, your license gets flagged,” Taylor said. “If you have another accident, that adjuster can go online and see how often they collect on other insurance companies policies and it could be a flag for insurance fraud.”

Taylor said reforms need to be made so people aren’t saddled with the exorbitant bills.

According to Commissioner Donelon, Louisiana is considered a working poor state. About half of the drivers on the road are carrying the basic liability coverage just to drive.