Connected cars, behind new fuel cells, are the next largest disruptor driving addition to the industry of automotives. Cars today are already able to park themselves, find gas stations once the tank becomes low, and help drivers avoid traffic.
In the future, it wouldn’t be uncommon for vehicles to be uncontrolled. These types of cars are now being aligned with the digital lifestyles of car owners and provide a smarter, enhanced, and safer driving experience.
For insurance companies, however, these types of cars alter the conventional landscape of automobile insurance and pose challenges which require them to rethink claims processing, policies and their entire business models. Insurance companies that evolve along with the auto industry will be the ones that will keep their place as industry leaders continue to move forward.
For a while now, automobile manufacturers have offered connected car services to knowledgeable drivers.
- GPS tracking
- Roadside assistance
- Emergency call out services
- Onboard diagnostics
- Mileage tracking
- Driver behavior devices (speeding)
- Concierge services
The newer technology in connected vehicles offers a beneficial and meaningful relationship between the insurance companies and the small businesses that have fleets. This is due to the insurance providers being able to better assess driver risks and rewarding them with things like lower deductibles, lower premiums and so forth. Rewards like this encourages safer driving which results in less accidents, reduced premiums and less insurance claims.
Big Data Leveraging
A feature that connected cars usually offer is telematics. This provides insurance companies the ability to monitor the driving of a person and see where they drive. Insurers are able to use and analyze the data they received to obtain valuable insights on their consumers to help in developing innovative solutions, develop new products that are specific to their style of their driving and improve customer service.
Usage-Based Insurance Products
For insurance companies that are working in a challenging environment, usage-based products provide a valuable opportunity to cut costs through pricing that is data-driven allowing them to pass on discounts to their clients and enhance the top line while shoring up the bottom line. Consumers are beginning to increase interest in usage-based offering through the insurance companies which reward them with lower premiums for good driving behavior.
Insurance companies are also able to deliver detailed accident data to service partners in the repair and roadside assistance business in real-time. This additionally streamlines the claims process and allows for volume discounts since they are able to route claims to connected and authorized service partners.
When the claims process is faster, this leads to higher customer satisfaction, lower risk of claim costs and disputes and lower costs for towing and repairs; all which make a contribution to the bottom line with reduced loss expense, reduced losses, reduced fraud and reduced severity of claims.
Although insurance companies can benefit the most from telematics and connected cars, it really trickles down to the customers.