The senior staff member sees the impact of ADAS data on the motor insurance market as one of the major trends the industry will see in 2020
A large part of business for LexisNexis Risk Solutions is finding ways to get insurance value out of data. In 2020, the company’s senior director of personal lines insurance Martyn Mathews expects to see three major trends evolve – here he explains why.
The global insurance market is undergoing seismic changes driven by regulation and changing consumer needs and expectations.
In 2020 we’ll see this transformation continue at pace, with new data insights underpinning the trends towards the insurance market’s evolution.
There will be no shortage of data, in fact the volume of it available to the market is set to grow dramatically, not least from connected things and greater industry collaboration, as insurers use both methods to better understand customer risk.
The key to success will be extracting the data that is truly meaningful, and can be used to drive product innovations and make better risk decisions throughout the insurance continuum, from the point of quote to the point of claim.
Fundamental to this approach are sound, transparent data practices, where privacy and data policies are upheld to the highest standards.
Rise of insurtech
One of the biggest changes to continue into 2020 is the continuing rise of the insurtech sector.
These businesses are looking to disrupt the traditional insurance model to meet emerging consumer demands.
But doing so within the existing insurance sector framework is not easy – as some have already found.
There’s no denying that insurance products are evolving in response to new types of risk, and insurance companies across the world are seeing that they can do more for customers beyond protecting them from traditional perils.
For example, the ubiquity of smart phones has opened up the development of micro-insurance for lower income households, as well as supporting the sharing economy for mobility, enabling personal assets to be shared for commercial use.
Linking ADAS impact to insurance risk
Mobility is certainly a significant growth area for the market as the framework is developed for connected cars to communicate directly with insurance companies.
This framework is crucial to enabling consumers to access insurance based on their car’s connectivity and Advanced Driver Assistance Systems (ADAS) – the name given to technology made to enhance safety and convenience for drivers.
By linking data on the vehicle build, including the ADAS features, to real life insurance claims, it becomes possible to really understand what features have the most impact on reducing collisions.
This opens up the potential to educate and reward consumers for the safety features in their vehicles, as well as how well they drive them.
In 2020, one of the major trends the market is likely to see is the development of the first insurance pricing solution based on the presence and activation of ADAS features.
Connectivity in the home and other buildings also has the potential to change the market dramatically – but change here is happening more slowly.
Christmas 2019 may see more take-up of smart home gadgets, but these are still relatively expensive, and the reason for purchase is more to do with convenience or a previous claim – such as a water leak – than for a discount.
But 2020 could see insurance providers taking steps to encourage adoption in the hope of a greater understanding of the impact of smart home technology on risk.
Whether it’s leveraging geo-spatial data to build a greater understanding of the growing environmental risks, pricing consumers more fairly based on their insurance history (not credit history), or enabling them to benefit from the data on and from their vehicles – the demand for data led insights is only going to grow.