We’re about 45 days into the new Trump administration, a new Congress, and new state legislatures. Auto insurance sales agents are starting to think about what this new government means for business. Aged auto insurance leads are still out there, and half will eventually close. The question is, will you be able to take seize this opportunity under the new normal? Here are some things to consider.
Potential Changes Coming to Auto Insurance
Premium Pricing Factors
One change could come as state legislatures evaluate how carriers price premiums. The latest trends in statistical modeling look at factors beyond a driver’s on-the-road record. Age, gender, credit score, education, and profession are all used by the industry, to varying degrees, to help assess risk. There’s the possibility that copious data on the public could be used to further adjust premiums based on a wider range of factors. And some lawmakers don’t like that idea.
In Montana, a new Democrat-sponsored bill has been introduced into the state legislature requiring insurance companies to set rates according to a customer’s driving record. “This has nothing to do with your risk as a driver, it has [to do with] how much they can take out of your pocket book, ” Rep. Tom Jacobson, sponsor of the bill, told a local news outlet.
Understandably, the industry isn’t too keen on new restrictive regulations. “State Farm opposes [House Bill] 291 because it removes from the insurance company the opportunity to utilize very important and predictive tools to allow them to accurately price our insurance product,” said Gregory Van Horssen, a State Farm representative.
How this will shake out is anyone’s guess, right now. But if a state like Montana passes such legislation, others could follow.
Self-Driving Car Insurance
Another factor sneaking up on the industry is the advent of the self-driving car. While Google, Uber, Tesla, Apple, and more are experimenting with prototypes, the technology is buggy and still has plenty of critics. But that may not be the case in another 4 or 8 years.
If the Trump administration encourages new auto technology and keeps a hands-off approach to what Trump has dubbed “burdensome regulation,” we could be dealing with a radically transformed auto insurance industry sooner than we think.
A recent industry article claims the advent of the self-driving car could send the auto insurance agency “over a cliff.” That’s a bit dramatic, but here are some points worth considering. With human error responsible for 90% of accidents, insurers could be pressured to lower premiums for self-driving cars or even cars with advanced warning systems and fail safes.
One study reportedly found Google’s first self-driving accident occurred after 1.45 million vehicle miles traveled (VMT), a rate of 0.7 accidents per million VMT. The average U.S. driver has 2.0 accidents per million VMT. The article suggests that as high-tech cars increase in number, insurers could feel a pinch.
Finally, the article points out that these high-tech autos will be able to track and aggregate all the best actuarial data — speed, distance between vehicles, weather condition response, brake pressure, driver distractions. There are some fear automakers could, at some point, cut out insurers altogether, coming up with package vehicle and insurance combos. However, keep in mind that’s all speculation for the future.
Distracted Driving Campaigns
Trump has already shown the ability to be persuaded to champion issues, veterans’ healthcare, women in business, and so on. So it’s possible Trump could get behind one of the industry’s biggest customer issues — distracted driving. The Hartford Courant reported on a recent insurance industry summit:
[The Hartford’s CEO Chris] Swift said he believes by far the biggest problem is people texting while driving, or getting distracted with their phones or in-car technologies in some other way.
“There is something going on in the way we drive our vehicles these days that needs to change,” he said. He urged everyone in the audience to talk to their families and friends about distracted driving. “We like to be stimulated as a culture,” he said later in an interview with The Courant, but he said he believes people can be convinced to stop using their phones while driving. He said auto insurers feel this increase in auto crash deaths is not getting enough publicity. “It could use a little spotlight.”
A new political or advocacy campaign on distracted driving could also affect insurance. Especially if it was coupled with legislation concerning driving records and premium pricing.
The Likelihood of Change
It still might be too early to say what the likelihood of change is. We could see tightened state regulations. We could see a distracted driving advocacy campaign. We will likely see technological advances, though timing is hard to estimate.
Agents Must Be Knowledgeable
In the end, it’s up to agents to be prepared for potential Trump policies, tech industry shifts, or state-level changes. After all, your business and clients are counting on you. Since we don’t know exactly what’s going to happen, being prepared in this case means being informed. And as you stay informed on this issue, strategize with your clients and business in mind. When it comes to this issue, half the battle, and at this point, is just paying attention.
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