Telematics-enabled auto insurance is becoming accepted by consumers in a rapid pace, and developments in crash-site information gathering and processing promise to create benefits for collision repairers, based on a vice president with Cambridge Mobile Telematics, a leading firm within the field.
Ryan McMahon, vice president of insurance and government affairs at Cambridge Mobile Telematics, said telematics are capable of providing all of the pertinent information about a crash to an insurer within 10 minutes of the event, streamlining the claims process.
“Every insurance company doesn't have this capability today in market. They’re not all marketing it,” McMahon told the audience at an OEM Collision Repair Technology Summit session on Nov. 4, during the 2022 SEMA Show in Vegas. “But it's coming.”
“We’re not saying that after the crash happens we’re likely to order, you know, all of the parts and all that stuff. That’s not what this really is. This isn't hocus pocus,” he explained.
“This is actually the basics. This is getting the fact that you know the crash happened, you realize, the physics from the crash,” he explained. By “ingesting” the data, he said, carriers can “[get] it out the door quicker and into the hands from the professionals to solve it. And that capability is driving huge value for that [insurance] industry.”
McMahon asserted two major insurers, Farmers and USAA, have digital crash data programs in position and are heavily promoting these to consumers, while approximately 75 % of major carriers are centered on adopting similar technology.
A combination of data provided through the cellphones of drivers who opt in to such collection and by services such as GM’s OnStar and Subaru’s StarLink, when available, can offer real-time notification that a crash has occurred, a potentially life-saving benefit that customers desire, McMahon said.
It can also give carriers an online ringside seat to some crash, telling them virtually everything that’s required to know how a crash occurred, and who’s at fault. This, he explained, can dramatically simplify and speed up the claims process.
To an insurer, he said, cycle time represents cost. “Whether that’s rental car, whether that’s storage, whether that’s the number of files that has to be open with an individual adjuster’s desk. No claims, not one of them, age well. The longer the cycle time, the more severe it is for that insurance industry.”
Through the data supplied by telematics, “cycle time is decreasing substantially,” McMahon said. “We have insurers who've told us their cycle time is 50 % faster. And cycle time, I think, is going to be a key ingredient in profitability for your business. A car a slave to [awaiting authorization for repair] does not help much anybody.”
“But the really important thing [for collision repairers] is the predictive models on total loss, which is where the industry thinks there’s a tremendous amount of value of being able to identify in the event that crash is a total loss or otherwise, or being able to direct it ultimately towards the place that needs to go first,” he explained.
Telematics, he was quoted saying, provides understanding of crash severity by identifying the vehicle's change in velocity. This information might help collision repair facilities resolve repair disputes, and automatically identify an overall total loss – prior to the vehicle leaves the scene of the accident.
“I don’t honestly know whether … the collision repair industry looks at this like a good thing or perhaps a very bad thing,” McMahon said. “I don’t know enough concerning the economics, but I would assume that there’s higher value in being able to facilitate the repair from the vehicle instead of dealing with cars that you’re not likely to so something with anyway.”
McMahon said that eliminating questions regarding an accident — such as the elemental question of whether a fraudulent claim is being filed — makes the process faster and more pleasant for the consumer.
Usually, in a crash scene, information can quickly become unavailable. “The vehicle gets moved, the witness disappears, and it’s gone,” he said. “So if you have the ability to then get that information towards the consumer, and walk them through how to get the right pictures in line with the crash and the physics, it is possible to determine that immediately that these would be the physics that were involved. ‘We want a picture of the side from the car we need an image of the side from the car,’ and then ultimately it comes down to you guys.” He was quick to clarify that he didn't intend to address the merits of photo-based appraisals in his presentation.
Asked by an audience member if crash data collected through telematics might be utilized by some insurance company inside a lawsuit, McMahon said he was not aware of any such use yet.
“It is getting used in subrogation today, it is getting used in inter-company arbitration, however i don’t know of associated with a cases where this data is used all the way to lit[igation] yet,” he said.
However, he noted the same information can also be obtained from components inside a vehicle’s airbag control module, though at considerably more trouble along with a cost of $2,000 to $3,000 per vehicle.
Like the airbag data, the telematics data could be subpoenaed throughout a trial, he said. Telematics, he added, is not really creating new information, just creating it in ways that’s more cost-effective and accessible.
Asked whether telematics might be used as a way for carriers to steer customers to a DRP shop, McMahon responded, “possibly, without a doubt.”
“But ultimately, it’s the customer’s decision on what they do. The challenge that happens at this time whenever a crash happens is the customer doesn’t really know what to do.”
He added that what’s “incredibly important” is to determine the ultimate disposition of the damaged vehicle, whether that’s a repair center or perhaps a salvage yard. That efficiency should benefit all the industries involved, he said.
The choice of a telematics-based insurance program is ultimately as much as consumers, and McMahon asserted the mixture of incentives like rewards for targets met and potential reductions in premiums have brought a very positive response.
In addition, through an app that can alert emergency personnel in the event of a crash is highly appealing, he explained. “The truth that they already know they have a guardian angel looking out for them is amazing, if it’s situated in the proper way.”
Among Generation Z drivers, those born between your mid-to-late 1990s and also the early 2010s, 37 percent prefer app-based claims processes. Among Millennials, generally those born between born from 1981 to 1996, the amount is even higher, at 43 percent.
For insurers, the draw is higher profitability — 15 to 25 percent more. That’s because telematics have highly effective in danger reduction. Apps keep an eye on what’s considered risky behavior — hard braking, rapid acceleration, distracted driving and contextual speeding — and encourage consumers to alter their behavior.
The primary factor holding consumers back from signing up for such telematics programs, McMahon said, is an issue about what types of data are collected, and the privacy of that data — where as well as for what it might be used, and by whom.
While this is a matter that lies between insurers as well as their insured, McMahon said all carriers spell out the privacy policies of their apps, and require consumer approval of the utilization of their data. Even though he could not speak for those companies, he noted that Cambridge works together with 21 from the 25 largest insurers, none which sells its customers’ information.
McMahon concluded with an invitation to repairers to continue the conversation by sharing with him the effects they knowledge about the new technology.
“We’re not experts in claims management. We’re not experts in the elements of reconstructing cars, that’s your business. But we hopefully might help facilitate these pieces,” he said. “And I’m very thinking about the feedback as this starts to unveil, how we could make this smoother, because, ultimately, it is about the consumer and making the…process faster to obtain the car done. Letting you guys do your work.”
Consumer Reports raises red flags over insurers’ telematics programs
Farmers adding crash detection to Signal telematics insurance app