The COVID-19 pandemic initiated observably increased technological adoption rates in vehicles, something property and casualty insurers should find promising. Recently, Goodyear and Bridgestone broke new ground with a project to develop new intelligent tire capabilities, as reported by the Wall Street Journal. Before diving into the details around this new technology, it’s important to consider how we got here. The past year’s transition to digital services and rapid acceleration of companies’ innovation roadmaps weren’t the only driving forces for P&C insurers. Even before the pandemic, property and casualty insurers were searching for ways to complete a shift from a “repair and replace” mindset to a more proactive “predict and prevent” approach.
To achieve this transformation, insurers looked to new technology to improve policyholders’ driving habits and prevent property damage. As it did with many industries’ digital offerings, COVID-19 dramatically sped up the rate of adoption for these new tools. Auto insurance telematics programs and usage-based insurance pricing soared in popularity—as did the installation of connected home devices, such as water leak detectors or home fire prevention sensors.
“New technologies help insurers make fewer payouts and help customers live in safer homes, drive on safer roads and pay lower premiums” – Michael Ellison, president, Corporate Insight
“Insurers and consumers share a goal of using technology to increase safety,” said Michael Ellison, president of Corporate Insight, “be it through a telematics device to encourage safer driving or a sensor to detect water leaks while the homeowner is away. These new technologies help insurers make fewer payouts and help customers live in safer homes, drive on safer roads and pay lower premiums.”
Intelligent tires
According to the National Highway Traffic Safety Administration, there are 11,000 tire-related crashes each year—leading to 600 fatalities. Intelligent tires are the newest safety tool available to insurers trying to create safer roads. Goodyear Tire & Rubber and Bridgestone new smart tire product, called SightLine, leverages a combination of sensors and a proprietary machine-learning algorithm to predict flat tires or other issues by measuring tire wear, pressure and road surface conditions, among other factors.
In the successful pilot test—which featured about 1,000 vehicles operated by 20 customers—SightLine was able to detect 90% of their tire-related issues ahead of time. While the pilot focused on the last-mile delivery market, we envision this technology will eventually become available to mainstream consumers—not to mention serving as a value-added service that P&C insurers can offer policyholders.
Increased technological adoption rates in vehicles
Corporate Insight’s Property & Casualty Insurance Monitor—which continuously chronicles the digital experience insurers offer their policyholders—regularly conducts surveys to gauge consumer sentiments and identify emerging trends. Our most recent survey, which was fielded in March 2021, focuses on digitally active respondents—people who had logged in to their policy on a desktop site or mobile app at least once in the last six months.
When we contrast our 2021 survey data with findings collected in 2019, shifting consumer habits are clear. Although about the same percentage of survey respondents indicated that they “have heard of the concept of telematics before”—72% in 2019 versus 74% in 2021—we saw a substantial jump in the number of those either currently or formerly enrolled in a telematics program, from 22% in 2019 to 36% in 2021.
We observed a similar jump when it comes to smart home device ownership:
Clearly, consumers are installing smart technology at a reliably increasing rate and substantially fewer consumers own zero smart technology products. Insurers can capitalize on this trend through policy discounts for customers with connected devices—for example, by offering a discount for smart tires once they become available to the general public.
Technology, discounts and data security
Underscoring the importance of this opportunity is the substantial impact discounts have on customer satisfaction and loyalty. In our survey, we asked respondents how satisfied they are with their insurer. Over a third (37%) said that they are “extremely satisfied.” But when we look only at respondents who reported receiving a discount from their insurer, the “extremely satisfied” number bumps up to 42% and that number jumps all the way 57% when we look only at respondents currently participating in a telematics program.
“The surge in connectivity in all aspects of life during the pandemic served to accelerate the longer-term trend of consumers becoming more comfortable with the idea of sharing so much about their lives” – Brian Sullivan, president, Risk Information Inc
Of course, the proliferation of connected devices raises new issues over data security. “Privacy and data security are major challenges for digital connectivity of any kind. The surge in connectivity in all aspects of life during the pandemic served to accelerate the longer-term trend of consumers becoming more comfortable with—or perhaps just surrendering to—the idea of sharing so much about their lives,” said Brian Sullivan, president of Risk Information Inc.
Property and casualty insurers are racing to implement the latest digital technology, evidenced by Corporate Insight’s Property & Casualty Insurance Monitor report of an unprecedented number of mobile app updates in 2020. “Still, the industry faces the fundamental challenge of implementing significant changes to digital platforms in an environment where many policyholders interact with their insurers on an infrequent basis at best,” said Justin Suter, senior analyst at Corporate Insight. “Despite experiencing significantly fewer touchpoints than industries like banking where customers might virtually interact with their bank multiple times each week,” Suter said, “P&C insurers are subject to the same rising consumer expectations for excellent digital experiences.”
With smart tires—as with any of the latest technologies—insurers are better able to meet growing consumer expectations by adapting to them as quickly as they appear.