Ahead of the Connected Insurance USA 2019 event, Jeremy Snyder, chief operating officer at Avinew tells IoT Now’s Jeremy Cowan how IoT is having a positive impact on the insurance industry – and what’s holding things back.
IoT Now: How is Internet of Things (IoT) connectivity changing the insurance services you are now offering to your customers?
Jeremy Snyder, Avinew: To best understand how IoT connectivity is going to change auto insurance, you have to also look at how IoT connectivity is changing the vehicles we drive. In the past, when new safety features have been added to cars – airbags, anti-lock brakes, etc. – insurance companies have monitored the impact of these features over several years before discounts could be realised for consumers.
With this new generation of cars, much of the technology is connected. For example, Teslas get over-the-air software updates regularly. Additionally, we can get large amounts of data from entire fleets of vehicles and see what’s happening in near real-time. This allows us to underwrite at the speed of tech instead of having to wait for 10 years of historical data to populate actuarial tables.
Using IoT connectivity, we will be able to determine when a car uses its semi-autonomous feature and/or uses advanced safety features, collect that data, and then use that data to get a more specific and accurate understanding of the usage and create a more precise risk model that enables usage-based discounts.
When you consider traditional auto insurance, even if an app or dongle is being used, that technology is monitoring the behaviour of the driver. Avinew’s programs are different because of connectivity – our technology monitors both the car and the driver. When a vehicle’s advanced features are in-use we believe those miles are safer.
Additionally, by monitoring routes, traffic and driving behaviour in real time we believe we have the opportunity to make the roads safer by educating consumers and turning over some of the driving to the machine. We think that if the new systems are used responsibly, the machine will be a safer driver – IoT connectivity is key to helping make this a reality.
The new generation of semi-autonomous and autonomous vehicles are equipped with many advanced driver assistance systems (ADAS) and a myriad of sensors, which will deliver previously unavailable data that will provide valuable insights into accident risk in both semi-autonomous and manual modes.
Avinew harnesses this data, applies the latest machine learning techniques and has developed predictive models of accident risk with higher degrees of precision than previously possible, enabling us to offer insurance at a significant discount to our customers for driving cars with these advanced, cutting-edge features.
IoT Now: What are the key technical or business challenges now facing connected insurance?
JS: The biggest technical challenge facing connected insurance is systems integration within big insurance companies. For example, if you are a Managing General Agent (MGA) for an insurance company, and the insurance company is relying on all kinds of legacy systems, it means you have people working with outdated code. Integrating and updating legacy systems with the latest and greatest technology – artificial intelligence (AI), machine learning (ML), IoT connectivity, etc. – is extremely difficult.
If the insurance company isn’t able to transition to modern platforms, then as an MGA, you are dependent on slow-moving legacy systems to manage your data. The only way to move quickly to adopt these new technologies is to become an insurance company and create your own, more modern platform.
IoT Now: How will the insurance industry evolve as a result of connected services in the next five years?
JS: People in the insurance industry are starting to think about how they can process data with AI and ML, but full adoption and ubiquity of this is definitely a ways away. The insurance industry is starting to realise the huge impact that intelligent connectivity (using AI, IoT, etc.) could have on the underwriting process and how it has the potential to change risk dynamics for carriers. Right now there are applications that include AI and insurance companies are testing these, but it’s not moving fast enough.
Currently, a vast number of humans are required to be involved in insurance transactions to make judgement calls and decisions. It’s what makes the buying, claims, and underwriting process so long. IoT and other technologies will likely be able to transform the efficiency in the chain and the speed of transactions will become unbelievably fast. This is where AI, as well as blockchain, come into play. If you were to have an insurance company that utilises both AI and blockchain to their full potential, transactions that once took days would be reduced to taking minutes or even seconds.
I think that eventually, the entire process will be digital. You’ll buy your insurance with one click, claims will be auto-adjudicated and after an accident, your car parts will be at the shop ready to be installed as the car is arriving. This will all be fuelled by intelligent connectivity, for which IoT, AI and other technologies will play a critical role.
Jeremy Cowan of IoT Now was talking to Jeremy Snyder, chief operating officer at Avinew.