By: Ruika Liu a RIG Inc Intern Researcher
The idea of connected-car is rapidly gaining momentum. Insurers worldwide are engaging in building new capabilities for flexible, next-generation insurance products based on connected car datasets. By accessing this valuable data at any time in a usable and actionable format, insures can attract more customers
, increase profitability, and create a better policy-holding personality experience through faster and better underwriting and claims processing.
Are you ready to learn more about how connected car data can be utilized in insurance companies?
Application #1: Usage-based Insurance
Usage-based insurance is a type of car insurance that bases the cost of a policy on how safe a driver’s habits are. Data is collected by the driver’s vehicle, analyzed by the insurer, and then used to determine how much of a discount the driver is eligible to receive. The better the driver, the better the discount.
Connected car data will be the foundation of innovative usage-based insurance (UBI) products, including pay-as-you-drive (PAYD) and pay-how-you-drive (PHYD). Based on automated mileage verification, time-of-day tracking, and driver behavior monitoring, connected car data eliminates one of the biggest barriers — the prohibitive cost of deploying and managing telematics devices.
Application #2: Driver Behavior Monitoring and Feedback
In-vehicle monitoring and feedback technologies capture and report safety-related information on driving performance. The technology is available through private vendors, car insurance companies, smartphone applications and is built into newer vehicles. Monitoring devices vary widely in data captured and cost and can even be portable or hard-wired to the vehicle. Most units report global positioning system (GPS)-based travel history and approximate location of stops. But units with connected-car data record more detailed information, such as maximum speed, distance traveled, hard-braking events, check engine codes, throttle position, engine speed, and timing advance. Emerging capabilities include accident avoidance or pedestrian detection technologies.
This information will be monitored in real-time and provided to the driver or a parent through a mobile app. It will also be recorded as driver’s habits, and insurers will provide premiums based on this information.
Application #3: First Notice of Loss, Claim, and Incident Reporting
The key function of a notice of loss is to alert the responsible insurance company as to the theft or destruction of something which is covered under the terms of the policy. Notification often precedes the filing of a formal claim. In the first notification of loss (FNOL), the insured may contact a representative and follow specific rules of engagement relating to the policy parameters.
Connected-car data will help people detect the occurrence of an accident in near-real-time. It will make it faster for the insurers to initiate driver assistance and support timely vehicle assessment, repairs, and claims processing, facilitating faster recovery of stolen vehicles.
Application #4: Report Reconstruction
Accident reconstruction is the process using scientific methodology to determine the circumstances, mechanics, and contributing factors associated with a collision. Questions such as, “How fast was the vehicle going at impact?” or “How much did the vehicle slow during the locked-wheel braking?” or”At what angles did the two vehicles collide?” can be answered by the reconstructionist after a thorough evaluation of available information.
Connected-car data will provide assessable valuable information such as time-stamped speed, acceleration, braking, signaling, and environmental conditions to improve accident reconstruction modeling. It will help match accident data against standards to eliminate fraudulent claims, cutting the loss for both the driver and insurer.
The personal or commercial use of connected car insurance can bring obvious benefits, giving
insurers the ability to be more competitive and fair, especially in insurance policy pricing. What used to be calculated based on gender, age, and driving years will now be based on actual driving data. The drivers who benefit the most will show better-driving habits or improve their driving behavior, usually those who avoid violent braking, high-speed driving, and late-night travel.
The reward is usually a reduction in insurance premiums. Other benefits include reduced congestion, traffic accidents, pollution, maintenance, and fuel costs. The connected-car data can also be used as a learning tool to assist people to become better drivers.
Although the term “connected cars” seems relatively new, the services they provide are well known. From ordinary GPS navigation and hands-free mobile phones to services such as roadside assistance and weather updates, connected cars are today’s most significant and rapidly evolving innovation in the automotive industry.
Insurers. (2020, August 27). https://otonomo.io/use-cases/innovative-car-insurance-car-data/.
PYMNTS.com. (2019, December 10). Insurance Gets Smarter Via Connected Vehicles. PYMNTS.com. https://www.pymnts.com/innovation/2019/insurance-and-other-services-get-smarter-via-connected-vehicles/.
What is Connected Car Insurance?: Insurance Telematics. IMS. (2020, April 3). https://ims.tech/opinion/connected-car-insurance/.