In our previous blog, we discussed how outdated notions have stalled the promise and progress of insurance claims automation. This blog answers the natural question of how that happened to begin with, especially given that claims automation is a universal goal, recognized for its enormous economic benefits.
The problem started like this: After the introduction of the smartphone, entrepreneurs scrambled to take advantage of its technological innovations and monetize them. Several upstart companies found it relatively easy to use the smartphone’s sensors to detect driving behavior, simple events such as someone driving too fast, or braking too quickly. They also found they could easily detect severe crashes, generally defined as those occurring at 25mph and above.
The detections in those early services are relatively easy to develop, they don’t require complex technologies or methodologies, and they have limited uses. One of the uses at the time was within the insurance industry for Usage-Based Insurance (UBI), which doesn’t even require capturing every trip a driver takes to accumulate a profile. Plus, insurers could offer the severe-only crash detection service at no cost as an incentive to get customers to join their UBI programs.
These technology companies weren’t very different from each other and offered basically the same services with no differentiation. In other words, they were commodity services from the start. Startlingly, those commodity services haven’t changed much in the intervening years. And so, they will never do the job required for today’s sophisticated needs within the insurance industry, starting with the fact they detect and report only 30% of collisions. You can’t run a successful FNOL program that targets only 30% of a problem.
Key blog takeaway: Severe-only crash detection (and commodity UBI data) will never meet the full requirements of successful FNOL
FNOL and claims automation is infinitely more complex and demanding than the needs of severe-only crash detection solutions. And today’s UBI programs need better and more sophisticated data than what is available through the commodity service providers. These solutions will have to reimagine the core architecture to be up to the needs of FNOL and claims automation.
That’s because their solutions weren’t engineered from the ground up to deliver on the exacting standards that require highly refined and cleansed data, methodologies that solve real-world problems, and nuanced crash detection that accurately declares incidents at all speeds.
Unfortunately for the industry, these early providers of commodity UBI data became preferred vendors to many insurers, creating the classic business problem of entrenchment. Carriers naturally turned to these entrenched providers when researching options for FNOL using smartphones. The results of these “experiments” through entrenched sources were far below expectations and needs, creating more problems stalling the industry.
Two reasons entrenched vendor relationships are stalling the industry.
- Poor results from existing vendors with commodity technologies cast doubt on the viability of smartphone-based detections.
Of course, old technology is not going to work for today’s needs. Just as you can’t draw conclusions by testing today’s advanced software on a twenty-year old computer, you can’t test the effectiveness of smartphone-based FNOL with technologies that were introduced over a decade ago. - Existing vendors promote the illusion that their technologies can be “tweaked and upgraded” to perform as needed, when they can’t.
Those who believed the promises of improvements from their existing vendors have been waiting a long time. From what we hear behind closed doors, no changes are expected soon. That’s because to address today’s complex needs, you must develop with those needs in mind from the ground up. Duct-taping add-ons isn’t going to help.
The solution exists for smartphone-based FNOL
Yet, as you’ll find reading this series, the technologies and methodologies already exist—and are in use—to solve for accurate, on-scene FNOL that can be efficiently and effectively used for claims automation and fraud mitigation.
However, more than one decision-maker within the insurance industry has told us that they have, in essence, PTSD over their underperforming UBI programs. Now they’re faced with getting the infinitely more complex programs for FNOL and claims automation off the ground? It’s enough to make someone hunt for a new job.
But before execs starts polishing their resumes, we suggest reading our upcoming blogs for a better understanding of existing solutions. They’re easier to implement than one would think.
Teaser revelation for our next blog: Capturing non-severe crashes below 25mph is easy!
If the commodity detection services wanted to start capturing and reporting non-severe crashes below 25mph, it’s easy! Really easy. In our next blog, you’ll know why. And why they don’t do it.