Page 12 - Feb2019_BarJournal

BarJournal INSuRANCE LAW

JULY/AUGUST 2015
fEaTUrE Insurtech Is Innovating

the Insurance Industry

BY MACKENZIE ROBINSON & KIMBERLY L. RATHBONE

owadays, practically everything HoW DoES THE TrackIng Work? traditional insurer uses to determine risk,
is on-demand on a smartphone, Until recently, the dominant method for which predict behavior based on statistics
and insurance is no exception. tracking driver’s behavior has been for drivers of other individuals ‘like’ the insured, such
Insurtech companies have to plug a device into their car’s diagnostic as age, gender, marital status, and location,
ncreated technological port, typically below the steering wheel. Now insurance companies are now able to focus on
advancements that make it possible to obtain insurtech companies provide free apps that the actual insured’s behavior, and reward safe
insurance, manage a policy, and influence the make understanding and buying a policy individuals for their personal driving behavior.
rate quickly and easily through an app. The easier and some give the insured the option Additionally, the insurance company risk
insurtech apps use telematics to track their of being tracked by their insurance company. predictions are alleged to be more accurate
insureds’ behavior, providing instant feedback and The tradeoff for the insured in allowing their with the personal data collected.
rewards in the form of lower rates, credits, or even insurance company to track and collect data
donations to charity for those with safe and healthy on them is in the financial savings the insured Claim Handling
behavior. These innovations are reinventing how is rewarded with for safe driving. Data gathered through smartphones can
the traditional, centuries-old insurance companies The app runs in the background of the automate parts of the claims process and
work. So, what does this mean for the insurance insured’s phones collecting data on driving sharply decrease crash to payment timelines.
industry and for the attorneys working in it? behavior. This data collection is possible This will save time, resources and money for
through built-in sensors that identify both the insurer and the insured. The apps use
fIrST THIngS fIrST: WHaT IS an measureable items such as time spent driving, a smartphone’s GPS, accelerometer, gyroscope
InSUrTEcH comPany? distance driven, speed, location, sudden and magnetometer to discern the difference
Insurtech companies can be defined in the movements and hard braking. This data, between a dropped phone and one that has
broadest sense as companies that use new when linked to mapping data providing the been involved in an auto accident. Therefore,
cutting-edge technology such as innovative speed limits and traffic controls in the area the telematics can independently notify the
apps, processes or business models to create being traveled, can indicate whether a driver insurance company immediately following a
efficiencies in the insurance industry. Co- is inattentive or reckless. GPS information crash and can automatically start building the
founder and CEO of InsureTech Connect Jay gathered can also illustrate when the driver claim report by plugging in basic information
Weintraub summed up the general mission of travels into areas with a higher risk of like the date of loss, location, direction of travel,
insurtech companies: “We want people to say accidents or theft, and could show a pattern and speed.
‘We like having insurance’ as opposed to ‘we have of risk. Telematics can also help to assign fault and
to.’ If we can change the relationship between Some track driving history for a trial period detect fraudulent claims. Data collected at the
the customer and insurer we like to think that and offer a one-time premium based off the time of a crash can provide a clearer view of
only good will come from that.” Insurtechs are data collected during that time frame. However, an accident than traditional methods such
independently expanding rapidly around the other companies offer greater discounts over as party statements, witness statements and
world and now many traditional insurance time as the app gathers more information photos, quickly providing insurers with the
companies are beginning to invest in startup on the driver’s history and use the history for evidence they need to assist in the insurance
insurtech companies and in developing their renewal quotes, encouraging drivers to keep claims investigation.
own technology. There are insurtech companies the app running all the time. Early industry data shows companies with
in all different branches of insurance — from these programs are seeing reductions in claim
auto to commercial to health and beyond. For cHangES for THE InDUSTry filings/costs as their drivers make a greater
this article, we focus specifically on the changes effort to demonstrate their safe driving habits.
insurtech companies are bringing to the auto Underwriting Because these business models directly reward
insurance industry; however, these changes Risk can be scored at a much more personal safer drivers with lower premium costs, they
and the advantages that come with them can level, focusing on the specific policyholder’s tend to attract drivers who are confident of their
apply to all forms of insurance. behavior and usage. Instead of factors a safe driving abilities.
12 | Cleveland Metropolitan Bar Journal clemetrobar.org