Insurers that are not already using the data from their telematics programs for claims would be wise to do so early in their adoption of telematics as the task only becomes more difficult as more data is collected, according to a claims expert.
While information derived from usage-based insurance telematics isn’t yet being fully utilized in the claims process, the benefits this data provides – consistency, efficiency and accuracy – offer a way to reduce claims costs, David Lukens, a director at LexisNexis, told the Safelite Solutions’ Annual Customer Experience Conference earlier this year.
Telematics can also position insurers to improve their customer service, he said.
Lukens said most U.S. insurers have some form of telematics programs in pilot mode at the very least but many are not using the data for claims even though telematics is considered an accurate way to predict loss costs.
He said many British insurers have already implemented telematics information as the first notice of loss.
Lukens recommended insurers begin early when data is small to incorporate telematics into claims because it is easier to manage. In addition, he said it is easier to integrate new pieces of data slowly.
Outside of the U.S., every LexisNexis client using telematics data in its claims processing is experiencing significant savings, said Lukens, who formerly managed claims operations for American International Group (AIG).
Claims Process
He explained how the process works to save on claims and impress customers. When an accident happens, the information is transmitted back to LexisNexis. The information is then used as a first notice of loss (FNOL). A message alerts the carrier of the insured’s accident. The carrier can then reach out to the insured and send help to the scene. To avoid bandit tow trucks, the insurer can dispatch a tow truck to the scene and mitigate the possibility of high tow and storage charges. The insurer can also expedite repairs by having the car moved quickly from the scene. The carrier can even dispatch a rental car to the scene. This, according to Lukens, provides a “phenomenal customer experience.”
Telematics provides a great amount of data initially for the adjuster to process the claim. This data typically includes weather details, time, date and location of the crash, speed and direction of travel. Lukens said this reduces the time it takes to collect the information piecemeal and, as a result, an adjuster can decide liability and compensability more quickly.
Not every telematics incident reported is an actual accident – there can be false positives if, for example, an insured driver hits a speed bump too quickly. For every four calls, one is a real accident, said Lukens. But he maintained that insurers don’t mind as it gives them a chance to reach out to insureds.
Three Cases
Lukens offered examples where telematics data assisted in claims investigations.
The first involved a parking lot crash. As is often the case, these types of crashes are usually word against word, with no police involved and no police report. Driver 1 backed out of a parking spot, pulled up and stopped in the aisle when driver 2 backed into it causing damage. At the scene, driver 2 admitted fault and gave her auto insurance information to driver 1. When driver 1 called driver 2’s insurer, she got a different story. Driver 2 said driver 1 was at fault. Driver 1 filed a claim with her own auto insurer and after review of telematics data that showed driver 1 was at a complete stop, driver 1’s deductible was waived and she was offered a rental car. This is because driver 1’s insurer knew the chances of a full subrogation recovery were good given the available telematics data.
The second example involves a subrogation claim for $85,000 for a 2011 crash, which was submitted as a FNOL. The insured denied the accident ever happened and then stopped cooperating with his insurer. Driving data showed the insured car was not being driven at the time of the crash. The insurer denied the subrogation claim based on the telematics information. Turns out the insured was an immigrant and didn’t understand why he needed to continue to cooperate with his insurer. A common fraud scenario was uncovered – fraudsters look for vulnerable people and report a hit and run after the fact.
The third example involves a phantom hit and run. A family heading to an amusement park for the day reported it. The insured driver had no claims history. The car was back at the insured’s house. A UM reserve at $70,000 for five cases of whiplash (insured and her kids) was opened. Telematics data indicated the car was inside the garage when the insured said the accident happened. It further revealed the car was used on the date of loss after 11 p.m. and its location was pinpointed to an abandoned car wash. It was learned that a van was used to smash the vehicle multiple times until it was towed back to the insured’s home. The insurer continued to monitor the insured and found more red flags. Her attorney’s office and other locations connected to her claim also turned up in six other claims. The ring was reported to law enforcement and eventually prosecuted.
Johnson is editor of ClaimsJournal.com, where this article was originally published.
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