Since the 1930s, UK drivers have been required to insure their vehicles against damage to third parties, at the least. Since then, insurance products have become increasingly sophisticated and specialised, and the market more competitive than ever.
If you’re shopping for insurance, in other words, the chances are good that there’s a product out there that’s exactly suited to your needs. For example, households with several vehicles parked on the drive (or the street) might find that they can save with the help of a multi-car insurance policy.
What is Insurtech?
Among the most significant drivers of change in the insurance industry is the involvement of technology. So deep is the relationship between tech and insurance, in fact, that there’s a special term to describe it: Insurtech.
Main Innovations within the Car Insurance Industry
The precise role that technology plays will vary considerably. Let’s take a few examples.
Black boxes
Already, vehicles are being augmented with geospatial tracking devices, which collect data on the driver’s behaviour behind the wheel. This not only incentivises drivers to slow down and take corners more carefully: it also helps insurers to get a good idea of the risk to the car, and to track wear and tear. In the future, it’s likely that such devices will become the norm, rather than the exception, and that hold-outs will pay accordingly higher premiums.
Machine learning
An insurer might use a combination of data-collection and machine learning to determine more precisely the level of risk being imposed by a particular customer. Factored in might be the location, age, sex and vehicle and driving history of the person in question. Through the right analysis, an algorithm might help to set the price of an insurance product based on a combination of every factor, and on factors that might not even be considered by a human being.
Among the data being assessed by the AI might be images of the vehicle itself. So, a customer might submit pictures of their vehicle, and have a machine produce a comprehensive report on the condition of the car. As artificial intelligence becomes more advanced, it will be able to make subtler distinctions – and to explain those distinctions to human beings.
Chatbots
Dealing with a high volume of calls is something that all insurers need to be able to deal with. This imposes a cost which prevents smaller insurers from entering the market. There’s a technology that’s already at work dealing with this problem: the chatbot. It will deal with commonly-asked questions automatically, before seamlessly handing to a real person whenever faced with a problem which it doesn’t know how to deal with.
