Risky Business
Technology Improves our Lives when We Use It
Hi Everyone,
We all know how advances in science and technology are changing our lives. Just look at the early “heads up†the East Coast received when “Monster Storm†was coming. Years ago, people would have just seen clouds on the horizon…
In the insurance world, technology has helped to keep premiums lower by avoiding predictable losses. How so? Insurance rates were steadily increasing for many years until the advent of seat belts. Though it sounds like simple “technology†now, that safety feature saves around 9,500 lives per year in the U.S. alone. That’s not counting the number of personal injury claims that are reduced by the minimization of the severity of an accident. What was once someone thrown through a windshield with multiple injuries can now become just a hard jolt of a seatbelt and the pop of an airbag.
The model continued with Anti-lock brakes for better control on the road, HID headlights for improved vision, daytime running lights for enhanced visibility to avoid collision with others on the road and GPS tracking systems to locate stolen vehicles.
When an accident happens and no injury to a person occurs, there’s very little to sue over… vehicle claims are quite cut and dry. Claims outlays are reduced, so premiums are reduced in order to stay competitive with other insurance companies.
…and Yes, we DO see premiums reduced from time to time, though no one believes me! LOL
Each year premiums fluctuate to keep in line with current losses, legal financial reserves, and estimates of probable future claims. If the estimates were correct the year before, the premiums stay the same or are lowered. If the estimates were off, and losses were higher, then premiums are increased across the board for that “group†of drivers. Believe it or not, most P & C insurers work on a 3.3% profit margin, which is a very low yield when compared to internet companies which operate at a 19% return on revenue.
So here’s your “heads upâ€â€¦premiums are increasing in a lot of places to a lot of people for a variety of reasons that have nothing to do with the cost saving advantages of technology. (Without safety features, they’d actually be far worse.)
This was before Storm Sandy. Most of those abandoned vehicles we see photos of swamped in water will be covered by insurance. The technology we have of being forewarned of impending weather disasters only works if we follow it.
…and on that bright note, let’s all pray for some dry, sunny weather!
Warm Regards,
Shelly Benisch, CIC Commercial Insurance Solutions (CIS)