Currently 58% of Canadians who pay for auto insurance indicate that they prefer everything to be digital. Two-thirds think premiums should fairly reflect their vehicle usage and driving performance, and what they pay now is too high. What can we do to change that?
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In Canada, there is a growing sense among consumers that a discernible deficiency exists in the auto insurance industry. Insurance is severely overpriced, and the processing time of claims is way too long. Industry experts believe that the data we collect on vehicles could change that.
Today’s world is all about data. Information gathered from our mobile and Bluetooth devices have more value than we originally intended. Vehicle data certainly has its uses when it comes to evaluating a driver’s behavior and environment.
If insurance companies are able to extrapolate information about driving behavior, driving time and driving location, they could determine an amount of insurance premium that accurately and reasonably reflects this information to clients. This means usage-based auto insurance could be the standard going forward.
A recent report from telecommunications company Vodafone shows that too many auto insurance providers fail to take advantage of the data available to them. More importantly, these insurers are not even preparing for the inevitable changes in the automotive industry, especially as we move into the age of self-driving vehicles.
This could change eventually. One day, insurance companies will need to expand on their data sources.
According to Nico Gollwitzer, head of telematics at Vodafone: “On average there are five data sources used by the connected car ecosystem. They include but are not limited to acceleration, location, time, type of road, local speed limits, weather, car diagnostics systems and driver ID.”
However, that won’t be enough in the future, as Gollwitzer suggests. As the range of data sources expands, insurance companies must discover and exploit them to their full advantage. One big factor is how the entire auto industry responds to the emergence of a myriad of data sources. Car manufacturers like Toyota and Volkswagen must also support data and insurance companies the same way they embrace autonomous driving technology.
It’s highly possible that vehicles of the future will ship with telematics systems already installed. Usage data will be within reach of all auto insurance companies. As experts like Gollwitzer have predicted, this could be the foundation for the creation of future auto insurance policies.