Many companies are coming up with new concepts, which are trying to use the latest advancements in computer technology, data gathering and even blockchain. Surely, they will have great mantras and advertising companies and sing and dance about it. However, they seem to never answer one question. Would all these innovative solutions lead to cheaper auto insurance rates? Every motorist wants to know the answer.
What Is Insurtech?
It is a process of improving policy coverage, delivery and take up by using technologies like artificial intelligence, data gathering and programming skills. Some companies come up with a whole new concept like pay-per-mile plans, while others concentrate on customer service with solutions like online chatbots.
There is always a risk that some of the new products and ideas won’t work. Historically, only few of them survive but they do make our lives better. Also, the usual brands in the business use variations of tech solutions in selling policies, servicing customers and handling claims. The general belief is that these advancements will save a lot of money for those companies. Let’s hope that those cost advantages will trickle down to customers who will enjoy cheaper car insurance rates.
How Insurtech Can Help Carriers and Consumers
The industry may be dealing with many complicated products, services and claims. However, there is a general theme to all that and that is repetition. Hardly ever companies, underwriters, claim handlers and loss adjusters come across something that they have never seen before.
The Repetitive nature of the industry makes it ideal for artificial intelligence and data science applications. Computers can be programmed to handle large data, analyze and make sense of it all. Then, these computers can learn from past cases and apply it to the future ones successfully.
This is actually used in the market at the moment. There are companies with fully automated claim handling processes. All motorists need to do is document their claims with pictures and estimates and the computer can determine the damages and even suggest which parts to be replaced and how much it should cost.
Claims take away a large portion of premiums and the costs are increasing with inflation and fraudulent attempts. If a vehicle insurance wants to be competitive in the market, the first thing they need to achieve is large cost savings. Then, they can pass those efficiencies to their customers or choose to pay higher dividends to their shareholders.
Would Consumers See Insurtech Savings?
This is the thing to keep in mind. Motorists won’t get discounts just because providers cut expenses. As usual, they have to be forced to offer better automobile insurance prices either by their competitors or consumers. Otherwise, they wouldn’t just hand over nice profits. It would be naïve to think so.
Motorists have to shop around for the best deals they can get and switch if they have to. Unless they start losing policyholders in numbers carriers will even try to push their prices up until they find the breaking point. There are many surveys and studies to show that this is the case in real life and they don’t make a move out of goodness of their hearts.