3 Emerging Trends In The Car Insurance Industry
When it comes to car insurance, it is good to stay on top of the trends. Not only does this help you to know what is new, what is being offered, etc, but it also helps you to know what will save you money, or cost you money. Here are three trends you should be aware of in the car insurance industry:
If you’re up-to-date at all on the car insurance industry’s latest jargon, then I’m sure you’ve heard the word “telematics” being thrown around. Telematic car insurance is the newest offering when it comes to car insurance. Telematic car insurance has many different names. You may also have heard it called “Usage-Based,” “Black Box,” or “Pay How You Drive” policies. Depending on which commercials you’ve seen or which web pages you’ve been to, you might also have heard it referred to as “Snapshot,” “Drive Safe & Save” or “Drive Wise” programs.
Really, all of these terms are meant to explain the same type of insurance program. It is a program in which the insurance company tracks your driving habits, usually using a telematic device. They track things like how much you drive, whether or not you speed, if you constantly brake suddenly, the time of day/night you drive, etc. The insurance company analyzes this data they collect to determine if you are considered a “safe driver.” If you are, they reward you with discounts.
This new trend/product in car insurance seems like it could be a great thing. As of right now, all of the companies that are currently offering telematic car insurance promise that they will only use this new technology to give you discounts and lower your rates, never to raise them. So for now we can rest assured that there are only savings involved with this new trend.
2. Internet Accessibility
Telematics aren’t the only hi tech trend we’re seeing with car insurance. As our society is becoming more and more technologically minded, we are seeing the car insurance industry follow that trend. Many technology-based advances are showing up as a result.
Insurance agencies are making their presence much more dominant online. Any car insurance agency you work with now has most of their options available to you online: requesting a quote, signing up for or making changes to a policy, paying a bill, asking questions, and even submitting a claim. There are also smartphone apps, and even text messaging options where your car insurance company will warn you of hazardous weather/road conditions.
We are seeing that these agencies understand that, in order for them to stay relevant, they must have a strong online presence and easily accessible online options. We are also seeing car insurance companies emerge that are completely online-based.
What this means for us is that it is going to get more and more simple for us to work with car insurance agencies online. No more being put on hold for hours, or waiting in lines to meet with a representative. Our society has come to the point where we demand online accessibility in almost every aspect of our lives. And the car insurance industry is definitely answering that call.
We can continue to look forward to even more technological advances in the car insurance industry. And as more car insurance companies make the move to more online options, they may even start cutting out some of their other more costly aspects. Brick and mortar sales offices will be replaced with websites. As the companies save money on rent, utilities, and sales agents, maybe we will even see them pass on some of those savings to us. Here’s to hoping!
Not all of the trends in the car insurance industry are good ones. A scary trend that is growing in occurrence and cost is customer fraud with car insurance. Take a look at a few of these numbers:
- The National Insurance Crime Bureau reported that is has seen a 20% increase in the number of suspicious vehicle claims in the first half of 2012 (compared to the first half of 2011).
- According to KPMG (an auditing firm), insurance companies lose anywhere from $770 million to $1.6 billion per year to organized fraud groups.
- The Department of Insurance has issued a $2.4 million grant to Riverside County to investigate insurance fraud, with car insurance being at the top of the list.
Many groups claim that as the economy has cause people to become more desperate, they have gone to desperate measures. No matter what is driving more people to commit car insurance fraud, there is no doubt that this is becoming a very costly trend.
Not only has the amount and cost of car insurance fraud increased, but the offenders have become even more tricky. Most car insurance fraud used to be centered around individuals or groups staging car collisions, or faking auto injuries, and then collecting the insurance money. Now, people are using identity theft at rehab and assessment centers to forge signatures of practicing nurses and then make benefit claims. The most recent case of this type of fraud cost nine insurance companies around $5 million in losses, incurred from paying for rehabilitation services that were never needed or performed.
If you think this trend doesn’t really affect you, think again. What does this increase in insurance claim fraud have to do with you? Look at those dollar signs above. You know who has to pay for those losses due to the increase in fraud? We do. As insurance agency’s “operating costs” go up due to these increased instances of fraud, you better also believe so will our rates.
Nicole covers the cheap car insurance & news sections of the blog on CheapInsurance.com.