How will car safety technologies impact the insurance industry?
Insurance companies have always been subject to risk and uncertainty. For car insurers, unforeseeable risks such as crashes, theft, and irresponsible driving can put a severe dent in profits. But with car safety technologies, there’s immense opportunity for insurance companies to improve their risk management and supervision.
While most car insurers rely on data such as credit ratings, age, gender and type of vehicle to evaluate risks, they cannot accurately determine the driving behavior, check vehicle dynamics, or prevent mishaps. Car safety technologies such as telematics, on-board diagnostic (OBD) devices, and adaptive cruise control (ACC) fill this void by monitoring vehicles in real-time through the use of sensors. These sensors send signals about drivers and their surroundings, which can help car insurance companies calculate risks better and provide more profitable services. For example, insurers can analyze real-time driving data to determine fair insurance rates, develop tailored products, and even provide driving assistance to prevent accidents.
Here’s how it works:
The use of safe car drive technologies will impact various aspects of the auto insurance industry value chain.
- Product Innovation: Analyzing the driving data generated by sensors will help insurance companies tailor products and services to customer needs and driving behavior.
- Pricing and Underwriting: New pricing and underwriting parameters will lead to optimized auto insurance rates.
- Claim Process: The presence of self-diagnostic devices will eliminate several steps involved in claims verification, which will help speed up claims processing.
- Insurance Regulation: Introduction of new regulations with create a shift in accountability from drivers to car manufacturers and network providers
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