Risk assessment, one of auto insurers' greatest assets. Determining a driver's risk factor provides crucial information that is at the core of the auto insurance process. Many factors impact your risk assessment: driving records, age, the vehicle owned, and gender. Similarities between the factors that contribute to risk assessment, not all insurers value factors the same. With all these different risk indicators in play, risk analysts have a challenging job and heavily influence the day-to-day lives of thousands. A wrong risk assessment could mean paying thousands of dollars more than it could have been. With the advent of artificial intelligence (AI), risk assessment has become more efficient and accurate, providing drivers with an insurance plan that is fit for them. 

Personalized Policies  

Personalization has become increasingly sought after, from tailoring clothes to custom jewelry, why should it not be included in one’s automotive insurance? With the vast data that can be obtained, such as driving habits, vehicle usage, speed, and even lifestyle factors, AI can produce policies that revolve around the unique risk profile of a consumer. Telematics, in automobiles, is the data that is obtained from devices within it, such as cameras, GPS, and accelerometers, which are used to further specialize insurance plans as they track the user’s mileage, location, and braking patterns.

Insurance companies, such as Allstate and Progressive, use this information to offer usage-based insurance (UBI) policies, where driving performance is directly linked to premiums. Safer drivers are rewarded lower premiums and vice versa. AI factors even outside variables such as social media and credit score into insurance policies to ensure that the pricing plan is accurate and fair to the specific customer. With the abundance of data that AI has on hand, it can nearly perfect the policies for each customer based on who they are. 

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More Accurate Risk Assessment

For any industry, the goal is to get the most accurate result, but even more so for the automotive insurance industry. Having an inaccurate risk assessment would mean an inaccurate price for consumers which can have drastic consequences. Linear risk algorithms are the most common, while works, often miss the smaller, granular details. Advanced AI algorithms provide those details, allowing for differentiating between various levels of risk.

Telematics present data that can paint a clearer picture of the consumers’ driving behavior. Having more information on driving behavior allows for a specialized risk assessment and policies using non-static AI algorithms, meaning a more accurate pricing plan for each user. As more data is obtained, AI will only get better, getting closer and closer to 100% accuracy.

Wrapping Up

Artificial intelligence is heavily driving the risk assessment scene in the automotive insurance industry. With the power of data and analytics, insurers can ensure their pricing plans for customers are more accurate and fair than ever with personalized policies for each customer. As AI continues to evolve, we can expect further innovations in the insurance sectors for insurance and the car repair industry.