The advent of technology and its evolution has lead to massive transformations in a lot of industries. The way people experience products, services, and life, in general, has undergone an insurmountable change. It’s no surprise that the insurance sector is ripe with improvements as well.
Technology has paved way for some very interesting opportunities to connect people with the services insurance companies have to offer. Some major transformations in the sector that has the potential to change how we view insurance today are artificial intelligence (AI), machine learning, blockchain, and IoT (Internet of Things). They are significantly accelerating growth and have a powerful impact on the auto insurance segment.
The traditional methodologies that were employed in arriving at the premium and pricing models, were heavily based on assumptions. In fact, for car insurance, the premium was decided by generalizations made on the consumer’s driving behaviour based on their age and the lives they led. More often putting young drivers at a disadvantage because they were considered to be more rash, reckless, and accident-prone solely based on their age bracket, resulting in them being subject to higher insurance costs by the companies.
Technology has made remarkable headway in such scenarios with big data playing a crucial role in recording the driving habits of the customer, it is now possible for the car insurance company to access more accurate individual patterns.
If a driver drives safe, then this recorded data benefits them as an insurance policyholder with substantially lucrative offers and discounts. Most of the monitoring is done with the help of telematics technology, which records real-time data pertaining to distance covered, braking patterns, speeding history, time of the driving and so much more.
This technology and its tools aid in the whole process of assessing the risk profile of the driver in a more comprehensive and realistic way, it not only determines the driver’s adherence to road safety measures and skill but also allows the car insurer to accurately frame the insurance policy by including a pricing model that best suits the customer. This helps in reducing deliberate fraud claims made by drivers when they are at fault.
With more and more insurance companies adapting to incorporate technology, usage-based plans are coming into the picture and becoming increasingly popular. AI is steadily taking over everything, starting from the ease of access, evaluation to the purchase of the right insurance plan. It’s thereby improving the customer experience in both purchasing and renewing the policy online.
Additionally, it is also improving the overall reach and engagement of customers in understanding the process of choosing and buying the perfect insurance plan for their vehicle.
The new mix of technology tools (telematics, AI, and machine learning) is also becoming an important part of insurers’ market plan to provide better and more personalised insurance plans in a fully digital environment. In the auto insurance segment, blockchain has also come to be known for its many benefits to the insurers. It is one such technology that establishes digital trust between the policyholder and the car insurer by increasing transparency.
These advancements in technology have been helpful in the simplification of car insurance claims, easing out high premium based plans, and creating a coverage specific product. In fact, many fintech platforms are putting this to good use by doing away with lengthy document submissions and heavy process-driven third-party verifications, making it a much smoother process for the customers to buy car insurance.