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Usage-based insurance may see big growth in next few years

Technological developments have led to many new trends. This includes new trends when it comes to auto insurance. One such trend is usage-based insurance.

Usage-based insurance involves insurers setting a policyholder’s insurance rate levels through reviewing data collected by telematics systems placed in the policyholder’s vehicle. The technology this rate-setting method is built around was introduced around a decade ago. Since that time, several big insurance companies have started offering programs in which policyholders can choose to have telematics devices put in their vehicles and their insurance rates set by the usage-based insurance method.

Currently, here in the U.S., there are around 5 million auto insurance policies that involve usage-based insurance. It is estimated that, as of 2015, 12 million insurance customers had such polices globally.

Growth in the use of usage-based insurance has thus far been relatively slow. However, it is expected that this may soon change. A recent report by IHS Automotive predicts that, by 2023, the number of customers who have such usage-based insurance policies globally will be over ten times the 2015 level, rising to 142 million.

The usage-based insurance trend underscores a larger trend that has been happening when it comes to motor vehicles, and that is that more and more digital devices that collect and store data are showing up inside of such vehicles.

Now, the setting of insurance rates is not the only area where issues regarding digital devices and data collected from them can come up for insurers. It is also possible that such issues can come up in personal injury cases involving car accidents. One wonders if, as more and more digital devices show up in cars are more and more types of data are collected by such devices, data collected by digital devices will play an increasing role as evidence in personal injury cases.

When mounting a defense against a personal injury claim brought in relation to a car accident, evidentiary issues can end up being very impactful for an insurance company. Attorneys experienced in personal injury defense can help insurance companies involved in personnel injury cases related to auto accidents with addressing key evidence-related issues in their case, including (if they arise) issues regarding evidence from digital devices.

Source: Insurance Journal, “Usage-Based Auto Insurance, Slow at First, Picking Up Speed,” May 12, 2016

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