4 Ways Big Data is Changing the Future of Car Insurance

The car insurance industry isn’t something the average person immediately thinks about when considering big data, but there’s an inextricable relationship between the two – and it’s only becoming more powerful and concrete.

You would think that new technology has made driving safer, but we’ve actually seen a reversal of this trend in the past few years. From 2007 to 2016, the number of motor vehicle crashes has actually increased. This is due in large part to driver impairment, which AXA Insurance attributes to more than 90% of collisions.

While it’s up to drivers, car manufacturers, and public officials to make roadways safer, insurance companies also have a role to play in making sure car ownership is as cost-effective as possible. In response to this, the industry is changing – and it’s using big data to get there.

Over the past few years, there’s been an increased emphasis on leveraging relevant, timely data to make more educated decisions that benefit both the insurance company and the policyholder. While those in the insurance industry see it on a daily basis – and are primed to think about the impact big data will have in the coming months and years – those of us on the outside peering in may miss it if we don’t know what we’re looking for.

When industry insiders like AXA say exciting times are ahead, here are some of the happenings that lead them to believe we’re pointed in such a positive direction:

Shopping for car insurance can be a pain. Not only are there multiple companies to get quotes from, but interacting with old, clunky platforms makes it slow and tedious. Some companies, such as ZhongAn, China’s first internet-only car insurance provider, are using machine learning and analytics to quickly analyze data and make the process smoother.

“We have broken the online purchase process into 45 parts, and monitor and analyse data flows from each part. If we notice that users spend too much time in one part, then we know something may be wrong with it, or it has potential to be optimised,” says Wang Yu, head of car insurance at ZhongAn.

Did you know that fraud accounts for between 5-10 percent of claims costs for U.S. and Canadian insurers? Nearly one-third of all insurers say fraud accounts for as much as 20 percent of total claims costs.