Optimize Risk Assessment and Auto Insurance Fraud Mitigation with Vehicle Telematics
Reported driver fatalities have spiked across the nation, vehicle repair and replacement costs have surged, and drivers failing to use seat belts has significantly increased, leaving the auto insurance industry quandary. So how can the auto insurance industry reduce claims management expenses, calculate more accurate risk assessments, and mitigate fraud?
Software innovations enhancing telematics have enabled the auto insurance industry to access data that precisely analyzes individual driver performance and habits, ultimately gaining a unique insight into case-by-case accidents that will reduce claims management expenses.
With real-time data support, the automotive insurance industry will be better equipped in its decision-making process regarding risk assessment, efficiently identifying fraud and more efficient claims management.
What is Vehicle Telematics?
Telematics combines telecommunications and software-based vehicle technologies that collect data on how a driver operates the vehicle. For example, telematics and enhanced sensors paired with a smart device enable real-time transmission of driver speed, harsh driver braking, sharp turns, and tailgating, common maneuvers associated with vehicular collisions.
Web-based APIs such as REST, SOAP, and JSON would be ideal for facilitating the real-time communication of telematics data to a database. Telematics can be configured for cloud connectivity, and an effective telematics system requires the following:
- Telematics hardware control unit
- Web-based APIs
- Cloud server. Data collected by the telematics unit is shared with the server, then sent to a cloud-based platform and stored. The end-user will be able to analyze the data.
- Mobile or desktop applications to access and review telematics data.
Leveraging Telematics Data for Accurate Risk Assessment
The auto insurance agency collects data to manage risk, reduce financial loss, and generate profit. But what if the industry could better utilize a resource that would give them a unique insight into specific driver habits that could be leveraged to reduce risks contributing to soaring claims management expenses?
Telematics offers more precise data on individual driver habits, such as hard braking and speed-common maneuvers associated with vehicular collisions. Enhancements to telematics include monitoring driver seat belt usage, monitoring device usage while driving, and abrupt or sharp turns made by the driver.
Most insurance companies review driver records and accident reports after collisions. Though standard industry practice, telematics data identifies driver habits before a reported crash, allowing auto insurance personnel predictive analytics to enable opportunities to make more calculated risk assessments when reviewing driver renewal policies.
Auto insurance companies can use this invaluable information when reviewing how a driver operates a vehicle and the risks involved when assessing insurance policy standards. By accurately identifying what specific driver habits contribute the most to collisions and detailed analytics of what types of crashes are responsible for the most fatalities, auto insurance companies have an unprecedented amount of available data to make informed decisions.
Telematics and Fraud Mitigation
Auto insurance fraud remains largely responsible for significant financial losses. Improperly reported facts on insurance claims, faked accident injuries, and misrepresented vehicle damages continue vexing the auto insurance industry. Insurance fraud is categorized by the Center for Insurance Policy and Research as hard fraud and soft fraud.
Hard Fraud:
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- Faking the severity of bodily injury from an accident
- Intentionally plan and fake a vehicular accident; premeditation.
- Deceiving an insurance agent of a vehicular theft or loss and inflating the declared value
Soft Fraud
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- Falsifying the extent of vehicular damage in an existing accident to have an insurance company pay a higher claim amount.
Telematics features GPS, but enhancements to tracking software include the global navigation satellite system (GNSS). GNSS is considered more accurate than GPS, but both technologies enable real-time tracking. The auto insurance industry has historically relied on GPS tracking features to mitigate vehicle theft.
Telematics with tracking enhancements and algorithms can help auto insurance companies accurately identify when a vehicle collision occurred and if a claimant attempts to report any previous vehicle damage with the new accident claim. This enables insurance companies to identify fraudulent claims sooner, ultimately reducing fraudulent claims expenses.
Telematics and the Future of Auto Insurance
The National Highway and Traffic Safety Administration (NHTSA) states vehicular fatalities have reached a 16-year high. Yet, the auto insurance industry struggles to respond effectively to this chilling news that contributes to soaring claims management expenses.
One major insurance company has implemented telematics crash-detection technology in response to the alarming trend of significantly increased collision claims. The company utilizes smartphone sensors and an app to detect a possible vehicular collision. Drivers are then prompted to contact the company to verify if an accident occurred and immediately file a claim to streamline the claims management process. Other insurance companies may follow suit by looking to telematics as a permanent solution to reduce claims management expenses.
Software providers play an integral role by enhancing telematics to offer the auto insurance industry a valuable resource to counter the continued trend of significant increases in vehicular collisions caused by unsafe driving habits.
Software engineers experienced with telematics enhancements such as the real-time transmission of driver habits like speeding, harsh driver braking, sharp turns, and tailgating; common maneuvers associated with vehicular collisions, and GNSS tracking features to mitigate fraudulent accident claims would be poised to contribute to a much-needed solution.
Author Bio:
Paul Bracht: Director of Sales, Chetu Inc
Paul Bracht is an experienced Account Manager with a demonstrated history of working in the computer software industry and Partnership technology landscape. He has worked at Chetu since 2015 and has built a reputation as a thought leader within the IT community. As the Director of Sales at Chetu, Paul is critical in assisting companies with their partnership technology, marketing, and media-related software projects. In addition, he is skilled in negotiation, sales, cold calling, sales operations, and customer satisfaction. Strong sales professional with a Bachelor’s degree in Political Science and Government from The University of Akron.
