Here’s how technology is changing the way insurers calculate risk

Here’s how technology is changing the way insurers calculate risk | Insurance Business America

Here’s how technology is changing the way insurers calculate risk
Technological advances in mobile computing, data collection and risk analysis are challenging long-held assumptions about pricing.

Armed with the latest in communication and measurement technologies, insurers are finding it easier to provide better products and services to their clients, a report from the New York Times suggests.

The article featured Metromile, a company based in Oregon that sells insurance in seven states. The company offers its auto insurance products with the condition that policyholders agree to have a monitoring device installed in their vehicles. The device remotely relays to the insurer the number of miles the vehicle has driven, which allows Metromile to adjust premium rates accordingly. This allows motorists who stay below the national average mileage of 12,000 miles per year to save considerably on their premiums, compared to those signed on to traditional auto insurance policies.

Metromile’s devices also sport additional features that make them quite handy to motorists. For instance, if the insurer detects that a street is to be swept, Metromile warns the motorist through the device to avoid parking in the area to avoid getting a ticket. The device can also detect a car’s performance levels, and can helpfully remind drivers if their vehicles need maintenance.

Another company, Vitality, has partnered with other insurers to offer consumers lower rates in exchange for logging in their health data. The company provides customers with monitoring devices such as Fitbits and Apple Watches to track their activities.

A startup called Trov offers a unique “on-demand insurance” service wherein consumers use a proprietary smartphone app to take a photo of objects of value, such as skis and cameras. Customers can then upload the photos to the insurer, who then offers insurance coverage for the items. The app even helpfully reminds policyholders if they want to purchase insurance before they intend to use their insured possessions—the app can detect if a policyholder is about to ski down a slope, for example, and ask if he or she would like to purchase insurance beforehand.

Such technologies could be a precedent for an even bigger change in the way insurance works.

“Metromile is the start of a broader shift,” noted IBM global insurance director Mark McLaughlin. “[Insurers] want to shift from paying when something bad happens to helping you prevent something bad happening to you.”

“The next generation understands the atomization of everything,” remarked Trov founder and CEO Scott Walchek. “Insurers have to get ready for customers who expect to have their ownership of everything, how they use things, understood. On-demand everything is the zeitgeist.”