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How is Emerging Technology Like Artificial Intelligence Impacting the Auto Insurance and Personal Injury Arenas?


The future of auto insurance is evolving according to advancements in technology and demand for a more user-friendly customer experience. Greater reliance on ride-sharing systems such as Uber and Lyft is an indication to some industry professionals that young people are less interested in owning a car than ever before. Combine that with the fact that, by 2020, there will be 50 million telematics-enabled vehicles on the road in the United States, and that autonomous cars are expected to be available for purchase by 2025, and it’s easy to see how the auto insurance world is entering uncharted territory. 

As we’ll see, such factors are having a considerable impact on the auto insurance industry, with major changes occurring today and further advancements predicted for the future. Additionally, as the auto insurance industry evolves, a residual effect is being experienced within the personal injury arena.

Insurance companies are working to anticipate the needs of customers in accordance with the changing technology. Millennials, the soon-to-be-largest generation in America, are well known for their tech savviness in addition to their short attention spans and need for immediate gratification. As such, if they are in the market for auto insurance, they want to be able to pay bills, change plans, and file claims in real time, with the click of a button. 

With over 80% of Americans owning smartphones, the days of meeting your local insurance agent at a brick and mortar office are essentially over. In 2017, Allstate announced an initiative to eliminate 500 drive-in claims centers in favor of mobile claims processing. And other carriers are following suit, combining telematics, the Internet of Things (IoT), and AI to not only improve the customer experience but also make the roads safer. 

Insurers utilizing the Internet of Things to monitor driving behavior are changing the face of ‘risk management’ within the emerging insurance market. Many of the largest insurance agencies are currently moving away from standard risk factors such as age to focus on analyzing driver habits to determine premiums. 

State Farm currently offers their ‘Drive Safe and Save Program’ for drivers willing to allow monitoring of their every move via either the company’s proprietary app or a third-party tracker system. By enrolling in the program, State Farm indicates that drivers can save up to 50% on their monthly premiumsbased on the results. Similarly, Progressive Insurance offers their mobile app Snapshot, which is said to offer qualifying drivers who use the service an average discount of $130. And Liberty Mutual offers their RightTrack system, which can earn drivers a lifetime 30% discount. 

As the tier 1 insurance carriers have adapted with the changing times, hundreds of new ‘InsurTech’ (which refers to the use of technology innovations designed to squeeze out savings and efficiency from the current insurance industry model) startup companies have been created. They aim to disrupt the industry by targeting the large carriers — frequently perceived as being inefficient, overpriced, and even old fashioned — and siphoning away some of the billions of dollars in premiums through a more affordable, customer-centric experience made possible by new technology. InsurTech startups view the goal of better managing risk through AI and other forms of technology as an opportunity to provide customers with a fairer (i.e. less expensive) marketplace where safe drivers are prioritized.

Such changes to the insurance landscape come at an opportune time. In 2016, car accident fatalities in the U.S. totaled nearly 40,000, the highest point in nearly a decade. Additionally, as cars become equipped with advanced technology features, they are more-and-more expensive to repair and therefore more likely to be written off as total losses by insurance companies. Both factors make safe roads as great a priority as ever.

And, of course, fewer accidents equal fewer personal injury claims, which should mean lower insurance premiums for all of us whether we choose a tier 1 company or an InsurTech startup. With motor vehicle accidents representing over 50% of personal injury claims, the effects of this newfound and ever-changing period in auto insurance will undoubtedly be felt throughout the personal injury arena. 

As technology advances, one thing is clear: our driving habits will be monitored more closely than ever, but those of us who drive safe and smart should have nothing to fear but lower premiums (and safer roads).