Driving the Future of Auto Insurance

Jul 8, 2019 / by Casey Brewer

Earlier this year, AAIS surveyed insurance carriers to better understand where they believe the auto insurance market is heading and the challenges associated with the auto technology evolution. After analyzing the responses, the results were clear: change is coming, and the opportunities for AAIS to help Members stay ahead of the curve are great.

Autonomous Vehicles (AVs)

Survey respondents agreed that autonomous vehicles (AVs) will become a primary mode of transportation, both for personal and commercial use. When asked to define a time horizon, respondents said that AVs will become more widely available in 5-10 years, but most agreed there’s significant work to be done before they fully take to the road…or to the sky.

To date, 29 states have enacted legislation and 11 have issued executive orders addressing AVs. “Legislation is happening, and the trend is to define standards,” El Cid Balitaan, AAIS Assistant Council, said. “It’s going to be an iterative, step-by-step process, and at AAIS, we’re working through the risk implications and insurance solutions.”
Respondents said they believe auto liability will move away from personal and more towards product and professional liability as AVs gain prominence, and that the distinction between personal and commercial auto insurance needs might blur. Various coverages will still be needed, but what types of insurance will be needed is yet to be determined. Factors, including liability, first-party medical coverages, and cyber security coverage will all come into play.

 

Telematics and Connected Vehicles

Survey respondents also shared their thoughts on the role of telematics in insurance. Telematics relies on sensors embedded in vehicles or included on smart phones that track and monitor vehicle performance and driving behavior. They can provide a wealth of information for insurers – but its adoption has been slow within the personal auto market thus far.

Survey results found that a majority of survey respondents don’t use telematics for personal lines today, even though nine of the top 10 personal auto carriers offer a usage-based program. However, AAIS sees the benefits and is planning for the eventual widespread adoption of telematics-enabled processes, knowing that telematics enables underwriters to understand and price the risk exposures much more accurately.

Commercial transportation is another story, where telematics has been embraced for fleet management and driver safety training. Survey respondents indicated that business owners want better control over their fleet. They want to know how their operations can become more efficient and how they can reduce their premiums by mitigating risk.

One question about telematics has yet to be answered with certainty: who owns the data? Survey respondents were unsure, believing ownership depends on the situation and how the data is used – with one exception. No survey respondents said the data belongs solely to the manufacturer (OEM). The industry feels certain that the data does not just belong to the vehicle makers, although they have an ownership interest, especially in situations where data is collected by embedded devices.

Survey respondents also shared concerns about barriers to telematics implementation and how to protect and leverage the data collected.

 

AAIS’s Role in the Future of Transportation

The foundation of the auto insurance industry’s future is data. The vast amounts of data generated by sensors and telematics can give underwriters more precise and real-time insights to grow and evolve their businesses. Risk will be more accurately and dynamically priced, and insurers will transform insights into new services and information that will make transportation and mobility solutions safer and more widely available than ever before. 

AAIS creates and files current and valuable insurance programs and loss costs thanks to the active involvement and collective contributions of its Members. AAIS has evolved by building a broad program platform and modern infrastructure to uniquely support Members in meeting the challenges and capturing the opportunities the future holds.

If you’d like to participate in the evolution of our Auto Program, contact an AAIS Advisor for more details.

Tags: Issues & Trends, Data & Technology, Insurtech, Telematics, Auto, Commercial Auto, Innovation

Casey Brewer

Written by Casey Brewer

Product Manager, Personal Auto - Casey Brewer, CPCU is AAIS’s Auto Product Manager. In this role, he leads the development of AAIS personal Auto forms, rules, ratings, and loss costs as the first component of an AAIS Personal Auto Program. He is also developing a Commercial Auto program for AAIS. Casey has previously held roles with USAA, Gainsco, Freestone, National Unity and Unitrin. Casey has a BA in Business Administration from the University of Texas-Dallas.

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