Is Technology Changing Insurance for the Better?

Do you ever feel like you’re living inside a sci-fi movie, waiting for the robots to come into the room? I know I do. I am always amazed when new technology comes out, and I have to admit, I’ve been a little surprised by how much it’s impacted the insurance sector.

When you think of insurance, you likely think of loads of data and paperwork, but it’s turning into so much more.

It’s getting ahead of the curve as far as technology goes, and I’ve noticed something.

It is changing insurance, and those changes are for the better, especially as far as the customer is concerned. If you are interested in saving money on your insurance policy (and who isn’t), you’re going to love the impact technology’s having on the industry.

How Technology Is Changing Auto Insurance

Technology has the power to make insurance policies cheaper and drivers safer. Some of these changes have already happened, and some are right around the virtual corner, but they’re coming.

woman driving car

Telematics – The Future Is Now

Have you heard of telematic devices? These are the perfect devices for reducing insurance costs. They let insurance companies assess your risk, and if you prove yourself to be a safe driver, you save money.

If your insurer gives you one of these, you’ll install it in your vehicle and it will send information about your driving habits right back to the insurer. Hitting the speed limit? I’ll know. Braking at a normal rate? I’ll know that, too.

If you’re a good driver, your rates will go down. It’s that simple.

This is typically referred to as “usage-based car insurance,” and some believe it can reduce premiums by as much as 30 percent. The concept has been around since the late 2000s, but it’s really hitting its stride now.

Artificial Intelligence and Machine Learning

Artificial intelligence (AI) and machine learning can also reduce insurance costs. This is one of the most exciting changes as far as I’m concerned. It reduces my workload, and you won’t hear me complaining about that.

So, just what are AI and machine learning? Those are really just a couple of fancy words for automatizing tasks. The more tasks I can automate, the less work I have to put into each claim. The savings go right in your pocket.

Captricity is one of the most popular automation tools out there right now. It takes handwritten forms and turns them into digital data with 99.9 percent accuracy. This improves the quality of the data while reducing cycle times.

Machine learning can also be used to interpret driver data. That helps us determine driver trends. As you can imagine, that can cut down on your premiums quite a bit.

Here’s my personal favorite. Machine learning can be used to find the best plans for each customer. Basically, the system learns all about you and connects you to the right policy.

Forget about answering a bunch of questions and waiting for the human mind to make connections. As much as I hate to admit it, the machines are a lot faster than my mind is, and they can draw connections I’m still trying to come up with in my head. Score one for the machines.

Two things happen when we turn this task over to machines. On my end, I am getting my customers the best product, which is what I want every time. They get the coverage they need.

Then, on your end, you are getting the best price. You aren’t stuck with items you don’t need, so you can save some money.

This is a classic win-win, and I love it.

Driver Simulators

Ah, the teen driver. Nothing makes an insurance agent cringe quite like insuring a newly minted driver.

I’m going to be honest here. Inexperienced drivers make me sweat.

Well, I can wipe my brow for the last time, thanks to driver simulators. Now, teens can practice in simulators before hitting the road. They experience different scenarios without putting anyone at risk.

For instance, they can go through the same accident repeatedly until they finally get it right. They learn all the skills they need without putting themselves or others in harm’s way.

What a relief, huh?

girl driving simulation

The teenSmart program is one of the most popular driver simulation programs out there. Those who complete this program have up to 30 percent fewer collisions than those who don’t.

It’s not just about reducing collisions. This technology saves lives.

Guess what that means. If your teen completes a driver simulation program, I’m going to offer a lower insurance premium.

I’m also going to be a lot less nervous when I hit the road. I love it when drivers are safe, so I’m a huge advocate of these programs.

Self-Driving Cars

Now, let’s think about how technology is changing safety. This comes down to self-driving cars, or autonomous vehicles, as they’re commonly known.

This is really a two-parter.

First, you have vehicles with some autonomous features. Autonomous features, like lane assist, can save you a bundle on your insurance premiums because these technologies prevent human error.

Fully autonomous cars are going to be the real game changer as far as insurance is concerned, though. Sure, you can save some cash with autonomous features, but just imagine when human error is taken out of the equation completely.

self driving car interior

First, automakers are going to have to assume the liability when self-driving cars take the road. I mean, if it’s your vehicle’s job to get you from Point A to Point B and it makes a mistake, that can’t be your fault, right? It’s going to be on the manufacturer.

Of course, accidents are going to be few and far between when those self-driving cars take the road. You know what that means, right? Premiums will plummet.

Sure, you’ll still need coverage in case a shopping cart sideswipes you or someone steals your car, but you won’t carry the same risk of getting in an accident. In fact, some insiders expect premiums to drop a whopping 60 percent by 2030 thanks to these cars.

These are the trends of today, but what’s coming up in the future? Let’s take a look at upcoming insurance technology trends to give you an idea of what to expect down the road.

Upcoming Insurance Technology Trends

As impressed as I am with the current technology, I’m even more excited about what’s coming around the corner. Technology just keeps getting better and better, and I can’t help but feel like we’re heading into a new technological era.

Car-to-Car Communication

Right now, cars communicate through honking. If I honk at you on the road, I’m telling you that I don’t like what you’re doing.

Pretty annoying, right? It’s also not very effective. Honk at a guy who just cut you off, and he’s likely to slam on the brakes. That hardly makes things better for us on the road. Many a traffic jam started with a honk.

So, what would happen if cars could communicate with each other without human interference? Think less honk and more secret talking. The communication will be like a whisper you can’t hear.

This is called car-to communication, and it’s coming around the bend.

car lane keeping

OK, so here’s how it’s going to work. This technology will allow vehicles to broadcast all kinds of data to other vehicles on the road. Vehicles will receive such information as speed, position, brake status, and the position of the steering wheel.

This information won’t just be communicated to the next car over, either. It’ll travel a pretty good distance, so you’ll communicate with vehicles you can’t even see.

Now, these cars aren’t going to talk to each other for fun. It’s not like they have gossip to share No, the cars will communicate with each other to avoid accidents and save lives.

When it first rolls out, the technology will be used to warn a driver of an impending crash. For instance, you might hear a beeping sound that tells you to hit the brakes. Then, it’ll be up to you to brake and avoid an accident.

That’s going to be great, but it’s going to get so much better.

Down the road, expect your vehicle to take over when it receives information about an impending crash. Imagine someone running a red light, and your car preventing you from taking off. That could seriously save your life.

Hold up a second. So, your car automatically brakes, and then the guy behind you slams into you, right?

No. That’s what’s so cool about this technology. All cars will have it, so each vehicle on the road will know what is going on. That means the guy behind you will avoid slamming into you, too.

This won’t just prevent accidents. It’ll change the insurance industry, too.

Fewer accidents mean lower insurance premiums. Lower insurance premiums mean happier customers.

See, I’m happy and you’re happy. You have to love technology. It’s keeping money in your bank account. It’s hard to complain about that.

Drones – Flying to a Claim Near You

Remember how I said that the world is turning into a sci-fi movie? Well, prepare to be blown away, because the drones are coming.

Seriously.

Drones are going to play a big role in auto insurance in the coming years.

man flying drone

Think about what drones can do. These unmanned aerial devices can fly to areas that are difficult to get to, collect data, and even predict risk factors. This can improve the underwriting process.

Who knows. Drones might even be used to assess the damage after an accident – if those pesky accidents even happen in the future. That could lead to faster payouts since you won’t have to wait for an agent to come out.

Some insurance companies are already jumping on board as far as drones go. Back in 2015, 10 insurance companies got approval to test and research drones, and expect more agencies to approach the Federal Aviation Administration in the future.

This is just in the testing phases, but expect drones to make a huge impact in coming years. Keep your eyes open and pointing upward. You just might see a drone with your insurance company’s name on it fly by.

Digital Disrupters

Insurance was once more of a face-to-face business. 

Some of you may remember when you would go to an insurance agency and tell the agent you wanted to buy insurance. He or she would fire up the old computer with the green screen, ask a few questions, and crunch some numbers.

If you were the client back then, you would watch the paint dry, waiting for those numbers to turn into a policy. Finally, about an hour later, you’d have your paperwork in hand.  You were an insured driver, and you only had to miss a half day of work! 

buy insurance online 

Technology has expanded the ways available to customers who want to buy insurance. Now you get to choose what's most convenient for you: online – on the phone – or in person.

The major agencies were the first to expand client options. Soon we all started going online to make it easier for our clients.

But then, something else happened.

Enter the digital disrupters.

That’s a cute little phrase for the digital companies that utilize low-cost technology platforms with little overhead. These disruptions are flooding the marketplace and growing more popular by the day.

The disrupters wouldn’t be able to grab such a large market share without technology. Their entire business model is built around technology.

Now, I know I should bemoan the digital disruptions. I should shake my fist at them and yell them to get off my lawn, so to speak.

But guess what. I don’t dislike them. The industry needed to be shaken up a bit, and they’re doing just that, making me a better agent in the process.

For one thing, it means I have to be more technologically savvy.

Sure, you can come into my office ay time, but you don’t have to do so. I’ll be just as happy to work with you online. I have all the digital tools needed to provide top-of-the-line service without ever looking you directly in the eye.

Second, it’s made the insurance industry as a whole get smarter. I’m talking about smartphones, of course.

In an effort to compete with the digital disrupters, we’ve finally acknowledged the smartphone revolution. Most people use smartphones, and insurance companies are looking for ways to utilize the technology.

Expect auto insurers to get techier in the coming years, making insurance more accessible. Easy-to-use apps and mobile websites are on their way. You’ll be able to use the apps to get real-time information and even conduct a what-if analysis on the fly.  

It’s going to be pretty cool, and I, for one, can’t wait. It will help me stay connected to my customers in a whole new way.

And here’s something else you need to consider. The major agencies have more money to put into these applications than the digital disrupters do. So, yes, the disrupters are changing the industry, but they are making us better and ensuring you get the best service from the big agencies.

In other words, the digital disrupters are making agents like me even better, and that’s great news for you.

Technology is exciting, and it’s led to many great things in insurance. But is it all positive?

It turns out technology can go wrong, too.

When Technology Goes Wrong – High Tech, High Bills

Technology has the power to lower insurance premiums, but there is a caveat. In some cases, technology leads to more accidents, and high-tech vehicles are more expensive to fix.

As you can imagine, that can cause insurance rates to go up.

Wait a second. Can technology lead to more accidents?

That goes against everything you know about technology. All those safety features keep you from hitting other people.

Well, there’s a little piece of technology in your pocket right now that is causing people to get in wrecks. Yep, that’s right, it’s your smartphone.

texting while driving

Distracted driving is a real problem on the roads. In fact, 3,450 people lost their lives due to distracted driving in 2016. As you probably know, most of those distractions are related to smartphones.

So, more people are getting into accidents and the vehicles are more expensive to fix. That means you can just expect to pay more in insurance, right?

Well, no, not exactly.

Technology can actually save you from this technological problem. Remember telematic devices? I use them to monitor my clients’ habits, and if I catch them on their phones, I give them a little advice:

Get off your phone if you want to pay a low insurance premium!

It really is that simple. Don’t let yourself get distracted, and you won’t fall victim to this issue. Hey, you’ll also be safer. Not a bad deal, is it?

If you need a little extra help, install an app like Cellcontrol. Once you sign up for the subscription-based service, you can insert a device under the dashboard.

Download the app, and you can’t receive or send texts when driving. You also won’t be able to use email or take pictures.

Oh, and here’s something I love about this tool. If you’re using it for your teen, your kid better complies, or you’ll know. If it gets deactivated, you’ll get an email or text alert. That means there’s no sneaking around with this device.

You know what all this means. Premiums are going down. What does that mean for me and other insurance agents?

Insurance Companies in the Future – Is Survival Possible?

You might feel a little worried about me right now. Don’t worry, though. I’m not ready to hit the unemployment line quite yet.

Are insurance premiums going down? Yep, they sure are, but the auto insurance industry is like the healthcare industry. There is always going to be a need, so I’m not ready to brush up on my resume quite yet.

As I mentioned earlier, auto manufacturers are going to be responsible for any accidents that self-driving cars are in, so I expect to begin writing policies for these manufacturers. That’s not all, though.

Let’s look at some other ways the industry might change.

Team of people using new technology

Product Liability

I expect the auto insurance industry to dip its toes into product liability.

As you know, high-tech cars are expensive. They are full of sensors and chips, and these devices can fail due to memory overflow and software bugs. Algorithm defects are also a real issue.

Manufacturers have to be concerned about liability regarding the failure, and insurers such as myself can step in and offer policies. It’s still a part of the auto insurance sector, but it’s a little bit different. I’m pretty excited to see if it pans out.

Big Data

Data monetization is likely the biggest opportunity for the insurance industry. Accenture Strategy estimates that the industry could make between $6–8 billion a year by selling data.

As you can probably guess, the industry has more data than ever before. By selling the data, it could practically break even from the losses that’ll come with autonomous cars. Who knows. We might even jump out ahead as technology lets us collect more and more data every year.

So, don’t worry about me. I’m going to make it. I’m just excited that you’re going to have so many benefits from this technological revolution.

Conclusion

Self-driving cars.

Telematics.

Technology is changing how we purchase and manage insurance is having on the insurance industry.

Technology means better customer service and lower premiums. It also means safer drivers are out on the roads.

Driving simulators.

Drones.

We aren’t waiting for the future anymore. It is here, and it’s cooler than we could have imagined. It isn’t just neat to experience all this technology, either. It’s exciting to see what an impact it’s having on the insurance industry.

Technology means better customer service and lower premiums. It also means safer drivers are out on the roads.

How do you think you’ll be impacted by technology in the auto industry? Will it make you stay off your phone? Will you use the money you save on insurance premiums to go on a vacation, or will it make it easier for you to trust your teen driver out on the road? 

Kernan Insurance Agency

9932 Brewster Lane

Powell, OH 43065

 
Main office: 614-764-0121
Toll free: 800-718-2663
Fax: 614-764-0310
 

Office Hours:

Monday - Friday: 7:00 AM - 5:00 PM

Weekends: By Appointment

 

Commercial Surety

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