The following is the second part of an opinion article on the five things you can expect from the car insurance industry in 2017, written by Seth Birnbaum, CEO of EverQuote. To read part one, click here.
Increased personalization and customer engagement
When it comes to insurance, consumers want more personalization. While further customization is a consumer desire in many industries, it is particularly increasing as a need in the auto insurance world.
Currently, 76% of insurance customers would switch providers for more personalized services and tailored products, and 38% would pay more for those offerings. Furthermore, 80% of insurance customers are looking for more personalized offers, communications and prices. In 2017, insurers will continue to develop processes with a more consumer-centric focus and we will see an increase in new personalization tactics.
Providers will focus on improving digital experiences to increase consumer engagement and they will also offer more tailored services. Expect to see more mobile apps through which consumers can view policy information, submit claims or otherwise receive advice directly from their agent or provider. Other app services may also include roadside assistance, weather reports, traffic information, and home safety tips to improve the customer experience.
Additionally, more insurers will use big data from telematics to better inform their personalization tactics as data analysis will provide insight into customers’ needs and behaviors. However, insurers will also be looking to expand consumer customization through other touch points, including mail, email, over the phone and in-person contact.
This year, insurers will also be working to fulfill the unique needs of millennials as the generation grows to becomes a consumer segment with increased purchasing power. More millennials are reaching the age where they purchase their own individual insurance policies and insurers will look to attract them with additional personalization and messaging through social media apps. If insurers optimize their use of available technology, they will be able to exceed consumers’ needs and expectations in the upcoming year.
Greater preparation for self-driving car technology
As self-driving cars continue to advance, the auto insurance industry will face greater challenges. It’s not easy to gracefully adapt to technology that is likely to change the way the industry has traditionally functioned.
Yet insurers must adapt if they want to succeed in the future and we can expect to see more preparation for self-driving cars in 2017. There will be many benefits to autonomous cars once they are fully developed and the advantages of having computer-operated cars instead of human drivers cannot be dismissed. Automated vehicles have the potential to drastically decrease traffic fatalities by up to 90%, lower trip durations and increase overall efficiency. They will also create opportunities for new types of transportation and help people who are unable to travel on their own. However, all of these positive changes will affect the way insurance industry operates.
In 2017, auto insurers will seriously consider how these changes will affect underwriting and begin to prepare for the implementation of greater automated technology and the eventual shift to self-driving cars. Underwriting will be less focused on the driver’s own history, and more focused on the car’s make, model and location.
Furthermore, self-driving cars will have unique coverage needs. Insurance may be needed for sensor damage, software malfunctions and lidar errors. Coverage may take on a no-fault form where neither party is at fault. Instead, each car owner or passenger may have coverage to protect themselves and their own vehicle. This year, insurers will also begin to prepare for what will happen during the transitional period—when automated vehicles share the road with human-operated cars—as that will also offer unique auto insurance opportunities.
Insurers may have historically seen self-driving cars as an issue to be dealt with in the far-off future but considering that there are now multiple manufacturers and that the government released their own guidelines—the shift is more imminent than many realize. In 2017, many providers will increase their preparations to adapt to this impending technology.
While blockchain is not currently used in insurance, expect to hear more about its potential uses in 2017. As more insurers adopt telematics and digital processes, there may be new applications for the advanced technology.
Blockchain could conceivably help insurers innovate products and services, increase the effectiveness of security measures or fraud detection and reduce administrative costs. Insurers only need to harness its power first, and this will likely be a large topic of discussion in the upcoming year.
Blockchain could allow insurers to use smart contracts that manage claims in a transparent manner. Additionally, this will help with fraud detection as if contracts and claims are recorded onto a blockchain, only valid claims will be paid. Location changes, authenticity checks and police reports can all be verified in a timely manner. Sensors could detect problems that trigger instructions so that claims can be filed and cash can be transferred. The claims process will become faster and more efficient which will improve overall customer satisfaction. Smart contracts may also allow for automated underwriting as the blockchain would verify a consumer’s information and be approved by other policyholders—saving time and creating less administrative work.
Furthermore, insurers who increase their telematics offerings will have more data as a result, and blockchain may help provide a way to optimize all of that information securely. Big data could potentially be archived and stored for long term use through blockchain, and consumer information would then be private to help mitigate cybersecurity risks. Over time, blockchain could help build a digital insurance platform that will have the potential to change the way traditional insurance operates, and we expect all insurers will soon begin considering its prospective industry applications.
This year will bring exciting changes to insurance. Continued adoption and integration of the Internet of Things will help prepare insurers for the future and set them up for success in 2017.
The preceding opinion article was written by Seth Birnbaum, CEO of EverQuote. The views expressed within the article are not necessarily those of Insurance Business.
Five things you can expect from the auto insurance industry in 2017 – Part one