The world is changing fast, and the world of auto insurance is changing along with it. At Freedom National, we want to make sure you’re informed and up-to-speed on everything that can affect your insurance premium and driving experience.
Here are 15 auto insurance trends you should know in 2020.
Increase in Distracted Driving
Distracted driving is on the rise, and it’s not hard to see why. If you’re driving 60 miles per hour and glance at your phone for five seconds, you’ve just driven the length of a football field without looking at the road.
Distracted driving will continue to be a priority as one of the most frightening and important auto insurance trends to look out for in 2020 and beyond, as more people become increasingly attached to their phones and mobile devices.
Inexperienced Commercial Drivers
The average driver may not be aware of it, but there’s a major crisis occurring in the world of commercial drivers (truck drivers, shipping companies, etc.). There’s a significant shortage of drivers, which means that more and more companies are experiencing greater driver turnover and employing younger and younger drivers. With these youthful drivers comes less experience, training, and potential for highway incidents. They, in turn, pose a greater risk when it comes to the safety of themselves and other drivers.
Litigation Changes for Injury Claims
More than ever, injury claims resulting from auto accidents are involving lawyers. This results in longer claim processes and rising claim costs. Meanwhile, the verdicts of trials resulting from auto incidents are becoming larger. This is largely a result of the fact that public opinion increasingly finds businesses at fault for many incidents, as opposed to the individuals involved.
Vehicle Repair Costs on the Rise
Consumer vehicles are more technologically advanced than ever, and many of those features contribute to safety. These include backup cameras, blind-spot detection sensors on mirrors, brakes that avoid locking, and much more. The cost of this technology? Higher costs for repairs. Many claims are rising as a result of vehicle features that are costly to repair or replace and require special expertise. For example, just the cost of replacing a bumper has more than doubled in the last few years.
Increase in Total Vehicles on the Road
More and more cars are driving more miles than ever, according to a range of studies on vehicle usage. More cars on the road, unsurprisingly, leads to an increase in auto accidents. Not only that, but more traffic can trigger more instances of road rage and aggressive driving behaviors, which further intensify the increase in accidents. This is made worse by the fact that traffic increases time on the road for drivers, boosting their fatigue levels and the temptation of distracted driving behaviors like checking cell phones while driving.
Impaired Driving on the Rise
For another consecutive year, drunk and impaired driving is the number-one cause of accidents on the road. More than 10,000 people died as a result of alcohol-related crashes in 2017 alone. Unfortunately, while drunk driving has been reduced in recent years, impaired driving as a result of other drugs has grown. Part of the problem is that users of marijuana and other drugs believe that they don’t impair their driving the way alcohol might. In fact, nearly half of all impaired drivers involved in fatal crashes had two or more drugs in their system at the time of the accident, according to a 2018 study by the National Institute of Drug Abuse.
New Business Models
The world of vehicles has changed. It used to be that vehicles were either used for personal use or commercial use. Now, that line has been blurred to the point of being erased completely. Between ridesharing services and peer-to-peer car rentals to semi-autonomous cars that now divide liability between the drivers themselves and the companies that manufacture the vehicles, traditional auto insurance has had to find ways to adapt. They’ve had to become more agile in their business strategies and how they handle unique cases that couldn’t even have existed just five years in the past.
Micro-Mobility Growing
More and more people are using smaller, non-automobile vehicles to commute and get around. While this is great for the environment and less costly than owning a full-sized vehicle, it’s also leading to more outside-the-vehicle deaths. Those figures have increased from 20% of all fatalities in 1996 to over 33%, or one-third, in 2017. Auto insurance companies are increasingly having to factor in these micro-mobility vehicles like motorcycles, bicycles, and more when determining insurance premiums.
Changing Generational Demographics
For auto insurance companies, the big question of 2020 is how they will make themselves more appealing to the millennial and Gen Z markets. These massive populations have significantly different expectations for how they engage with companies they do business with, including a digital-first approach that avoids in-person or phone interactions for the sake of convenience. Companies that strategically replace their old practices with more streamlined claims processes are likely to see higher engagement from these growing young markets.
Improving Customer Experience
Gone are the days where premiums were the only factor used by consumers to determine which insurance company they would choose. Now, customers care more than ever about the experience they have with their insurance company. As a result, companies are stepping up their game when it comes to making claims, applications, and payments as smooth as possible for all users.
Increased Focus on Environmental Concerns
Many insurance companies are transforming the way they do business as a result of environmental concerns. Their customers want to know that they take the environment seriously, so they’re beginning to reward drivers who own environmentally-friendly vehicles with a range of discounts and other perks.
Mobile Insurance
Almost everyone now owns a cell phone, so more and more auto insurance companies are turning to mobile devices for the full range of their services. Drivers can now submit claims, request roadside assistance, and more from the friendly interface of their insurer’s mobile app.
Advanced Analytics in Auto Insurance
Auto insurance is all about assessing risk, and advanced analytics now allow them to do that better than ever. Algorithms are now doing much of the work once handled by insurance representatives and claims adjustors, determining premiums and more based on a complex set of analytical data.
Increased Automation
Analytics aren’t the only place where robots are taking over. Automation is also now a major force when it comes to communicating with customers through chatbots, claims that don’t require human interaction, and other areas. While some insurers are slow to adopt these policies, others are eager to automate as much of their processes as possible.
Higher Medical Costs
As medical care continues to become more expensive, it’s outpacing the inflation rate for medical expenses. The result is that medical expenses now account for over 80% of all economic losses claimed as a result of auto insurance claims. That’s a dramatic figure, and it means that auto insurance companies are now having to insulate themselves and their policyholders more effectively against severe medical costs resulting from auto accidents.
Because of the trends outlined in this article, many drivers are finding their auto insurance premiums are increasing. If you're looking for cheap car insurance online, Freedom National can help you with quotes and all the information you need to get the right policy at the right price.
