At the AIR 2021 National Conference, co-hosts Brian and Patrick Sullivan noted issues of fairness in the traditional rating variables employed by the auto insurance industry—traditional factors such as credit, age, gender and ZIP code are still heavily relied on, while telematics programs consider hard braking, rapid acceleration and nighttime driving. Carriers each rely on their own proprietary combinations and weights to underwrite crash risk but are increasingly looking for new ways to ensure underwriting and prices are fair and equitable, especially in light of recent developments in some states.

The Delaware Senate just passed a bill that will prevent auto insurers from using a driver’s sex, gender or gender identity to determine their premium. Similarly, Washington insurance commission Mike Kreidler announced a rule in February prohibiting insurers from using credit scoring to set premium rates. Three groups—the American Casualty Insurance Association, the Professional Insurance Agents of Washington and the Independent Insurance Agents and Brokers of Washington—jointly filed two legal actions that a superior court judge ultimately combined and signed an order formally staying insurance commissioner’s attempted ban.

Insurers currently offer discounts for car safety features, anti-theft devices or telematics program participation. Providers could also consider offering car insurance discounts for dashcams. These cameras can capture and preserve how an accident occurred and ensure fairness when applying fault. They can also help prevent insurance fraud from those who try to take advantage of precedent carriers apply to certain accidents—as seen in the cases below. Notably, as insurers strive to improve their digital user experience to meet modern customer expectations, outside the box thinking can set insurers apart from their competitors in an industry where participants often struggle to differentiate themselves in the eyes of consumers.

This screenshot shows a list of insurance discounts and reasons for the discounts from Chubb
Chubb Policyholder Site My Car Page – Deductibles and Additional Details Sections

The latest edition of Corporate Insight’s P&C Insurance Claims Monitor Update showcases a New York City-based driver who was found not-at-fault for two separate car insurance incidents where dashcams made the difference. One accident involved a courier on a bicycle; the other was a rear-end collision. In both cases, accident precedent would typically have assigned fault to the insured. The insured driver, however, had a dashcam that captured both accidents.

This screenshot shows State Farm's claims overview page with an active claim in progress
State Farm Policyholder Site Claim Overview Page

For the first incident, the bicyclist was traveling the wrong way and went through a red light while distracted by a phone in his hand. The driver was able to brake with enough time for the bicyclist to react, creating a lower speed collision and avoiding injury. Nearby police officers let the driver go without a citation after viewing the dashcam recording. Months later, the bicyclist threatened a lawsuit for damages. Thanks once again to the dashcam footage, the insurance carrier was able to confirm the driver was not at fault and neutralize the lawsuit.

The second incident was a rear-end collision, when a lead vehicle swerved abruptly back onto a highway from an off-ramp and into the path of the insured driver. After the collision, the dashcam also recorded the passenger and driver switch seats prior to exiting the vehicle. The owner of the leading vehicle, after learning about the dashcam footage, accepted responsibility without challenge.

As our P&C Insurance Monitor Claims Update notes, without the dashcam, the insured driver could have faced misapplied liability for both incidents. The long-term consequences would have been severely detrimental to the insured: a harmed driving record, higher premiums for years and exposure to an inappropriate lawsuit. Currently, carriers promote mobile apps that support uploading photos of an accident scene to promote fairness and accuracy. While convenient, obtaining an understanding the actual accident would also greatly improve fairness, while also reducing the amount of time to investigate collisions and potential cost of litigation. By offering discounts and guidelines for proper use of dashcams, car insurance carriers have an opportunity to improve fairness in premiums and liability—helping insurers improve fairness going forward, as noted by Mr. Sullivan.

CI looks forward to the next Auto Insurance Report National Conference, April 24-26, where the future of auto insurance and technology, including fairness, are sure to be explored in greater detail.

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