In part two of this special AAIS Advisory Report on the auto insurance market, John Kadous, VP of Personal Lines at AAIS, talks about how emerging exposure, technology and Big Data are impacting carriers’ approach to auto policies.
With increasing uptake of telematics, we see more data is being generated and more underwriting tools for auto insurance carriers. Mr. Kadous says auto insurance carriers are now able to venture away from standard rating methodologies that have been used for so long.
The sharing economy presents a new exposure for auto insurers. According to Mr. Kadous, there had been a very clear line between personal use and commercial use of automobiles. With the sharing economy, those lies are blurred. He explains how ride-sharing services, like Uber and Lyft, have people who have never been professional drivers, now chauffeuring passengers around. In the past, that was a “taxi”, insured under a commercial policy. With vehicle sharing, unused cars are now being leant out as “rental cars”, again, a risk once covered under a commercial policy.
New AAIS forms allow auto insurers to underwrite risks from the sharing economy. AAIS forms accommodate Phase I, Phase II or Phase III ride-sharing. In Phase I, policies cover drivers without a passenger who are not responding to calls. In Phase II, drivers are en route to pick up a passenger, and Phase III is when drivers have a passenger in the vehicle.
While in development, AAIS recognized a new risk from an app connecting drivers with people looking to have goods delivered. AAIS was sure to include endorsement wording to cover this emerging risk as well. AAIS also created forms to cover risks from car sharing as well, all built on the industry base form, with some 60 optional endorsements to allow for ultimate customization.
Watch part one of this special AAIS Advisory Report on automobile insurance, with Robert Gordon, SVP of PCI Policy Development and Research, speaking about economic and behavioral changes affecting the auto insurance market, including increased losses, distracted driving, “drug driving”, the “sharing economy” and autonomous vehicles.
For more information on emerging auto insurance risks, visit the AAIS website.