Over the past few years, industries as a whole have been transitioning into a more technology focused way of business management, with the insurance landscape being no exception. With the constant evolution of technology and various trends developing year after year, it is crucial for agencies to not only be adapting with the times, but to be doing it successfully. When looking at the leading technological trends of 2024, the use of vehicle telematics and the implementation of smart home technology are at the top of the list as they are innovative tools that truly have the potential to reshape insurance practices. In this blog, we are going to take a deep dive into what exactly vehicle telematics and the Internet of Things (IoT) for the home offer and how these practices can not only aid in the growth of your business, but your customer satisfaction levels as well.
Vehicle telematics is a type of usage-based insurance that takes into account various driving habits through the use of GPS tracking systems in order to determine an individual’s insurance rate, in turn resulting in either a discounted or increased premium. The concept of vehicle telematics is to reward drivers who perform safe driving habits through insurance discounts, which insurers hope will lower the overall number of costly claims and lead to more effective risk management. The two types of telematic-based plans offered by insurers are usage-based and pay-per-mile. While usage-based tracks various driving habits such as braking intensity, average speed, time of use, and average use, pay-per-mile only tracks an individual’s average daily mileage, a good option for those who work remotely or just happen to drive less than the average person.
Both of these telematic-based plans document the specified driving habits either through the use of mobile apps, Bluetooth beacons, or a device that is manually plugged into the vehicle. The data collected is then assessed by software, helping insurers determine an individual’s overall risk and rate. Enrolling in a telematic-based insurance program does not necessarily mean you will end up paying less for vehicle coverage. For example, if you are enrolled in a usage-based plan but are consistently driving during rush hour on the highway, even with safe driving practices your premium is likely to remain the same or even potentially increase due to the amount of elevated risk associated with those specific driving habits. It is important to be aware that vehicle telematic insurance programs take into account all of your driving data to determine your rate and premium, so make sure that enrolling in a program would be a good fit based on your daily driving habits before doing so.
Aside from contributing to an overall increase in driver safety through customer incentives, vehicle telematic software also provides numerous benefits for the insurer putting these telematic-based plans into effect, with customer satisfaction and retention being at the top of that list. Providing policyholders with personalized discount models for the same amount of coverage creates a level of trust that will toss out any need for clients to believe they could get a better deal elsewhere, in turn aiding overall retention. Increase in overall profit through more precise risk assessment, the ability to develop more personalized products, and decreased claims costs are all potential benefits of the implementation of telematic software in your independent insurance agency.
With smart home technology becoming more prominent in the recent years and only projected to continuously develop, insurers have started to integrate insurance practices with the use of smart home systems. Smart home technology, such as ring doorbell cameras, smart locks, smart plugs, water detection devices, etc., provide homeowners the luxury of adding extra safety precautions when it comes to protecting one’s home. With many of these smart home systems being able to detect risks before they escalate, from breaking and entering to water damage, insurers’ have begun encouraging policyholders to install smart systems or technology in their homes through incentives due to the installation resulting in an overall decrease in risk and potential costly claims.
Much like vehicle telematic systems, smart home technology collects the data, providing insurers the opportunity to leverage and use said data to their advantage in efforts to better understand the behaviors of their customers and assess risk accordingly. If a claim is filed, the claims process is able to be completed at a much quicker pace due to the installed smart technology being able to verify the claim in minutes, moving the process forward. Smart home system data collection also provides benefits to policyholders through tailored premiums based on individual household usage behaviors, potentially resulting in eligibility for lower premiums.
It is essential for insurers to adopt vehicle telematics and smart home technology integration in response to continuous technological advancements in 2024. These innovations not only provide personalized insurance policies and improve risk assessment, but also streamline claims processes, and aid in the enhancement of customer satisfaction. By effectively utilizing these trends, your independent insurance agency can thrive in today’s evolving market.