FOUR WAYS THAT CAR INSURANCE WILL CHANGE IN THE FUTURE FOR NEW YORK DRIVERS
The saying goes, the only thing constant is change. However, when speaking about the auto insurance industry, not a whole lot has changed in decades. Sure there are new ways of shopping for car insurance, such as online, or on your cell phone, there are even insurance companies who exist only on the internet. But the way insurance companies insure us, pay our claims and charge us hasn’t changed much in decades. We are now on the cusp of witnessing a complete shift in how we will buy car insurance in the future
1. Data-driven car Insurance pricing
As cars get more and more crash avoidance features federally mandated, and even as driverless cars enter the marketplace, the auto insurance industry becomes more aggressive in developing data-driven insurance and pricing models.
What are Data-driven pricing models?
A few years ago insurance companies developed small devices that you could voluntarily install into your cars. These devices gathered data on your individual driving habits, such as how long you were in the car for, how far you went, how fast you drove, and even how frequently you jammed on the brakes.
In exchange, you would get discounts for carrying these devices. What they were doing was building new models based on more specific driver data, versus broad assumptions of drivers in your specific geography.
Insurance companies have seen a 30% rise in customers who want the benefits of reduced premiums that come with usage-based insurance.
The payoffs for the insurers come in the form of more accurate risk pricing models and better claims processing. Carmakers are also getting on board this trend.
2. In the future, your New York car dealer could also be your insurance company.
Recently a major car manufacturer announced that it will begin offering usage-based insurance by partnering with Japan-based Insurance company to cash in on the growing trend of data-driven insurance.
These new “telematics insurance products” for the American insurance market could start to show up within a year or two, and vehicles could start being made with built-in sensors to track driver data. More and more carmakers are partnering with insurers and other providers to offer these services to their drivers as well.
Imagine they day you buy your next car, as you are signing the dotted line, you could also sign up for your own manufacturer-backed insurance coverage.
3. In the future, your car might become the insured party, not just the insured object.
Two emerging trends are most likely to reshape in the automotive insurance industry.
Advanced Driver Assistance Systems (ADAS) and autonomous driving are coming at us very quickly. ADAS systems are new technologies such as auto-braking technologies and lane departure assist. With these new standard features, car accidents will decrease causing a drastic decline in claims, which will also begin to slow down any significant rise in insurance premiums. Insurance companies will have fewer claims to pay out, but growth through premiums will stall out.
In a 2014 study by the Highway Loss Data Institute, currently installed ADAS features in cars created a 40% drop in bodily injury liability losses and a 27% decrease in medical payments.
4. Pay as you go car insurance is a possibility.
Car sharing and loan sharing (where you don’t actually own the car, you just pay for your usage) will also create the need for temporary insurance for the parties involved. As OEMs provide more fully comprehensive mobility programs, many are banking on the concept that consumers will see them as a car, car insurance, and even car repair solution. Already more and more manufacturers are mandating that their cars be fixed at OEM certified shops.
With the advent of all these changes, advanced analytics will provide the key to creating the best insurance risk modeling and pricing services for New York drivers and elsewhere in the nation.
As the industry moves toward paying for miles driven, advanced analytics will also be critical in managing the development of models to account for the right balance between OEMs recovering appropriate fees for use of their vehicles with a price that drives consumer adoption of these business models.
As you can see, one of the most expensive aspects of car ownership is about to change for New York car owners and car owners in all states. It could actually become less expensive to insure your next car than your current one.