What if new customers used their smartphones to upload a few photos of their cars, trucks, motor homes, recreational vehicles, or interior features of their homes?
Insurance companies have been busy in recent years developing various mobile apps. Some insurers offer functional capabilities, such as the ability to pay a bill or report a claim. Others have quoting apps that provide consumers with an optional sales channel. Many states have passed legislation allowing a “virtual ID” card on smartphones, with more states considering that option.
Those are all great uses of technology. People love to use their smartphones to conduct business, and we can expect more and more ways to tap the capabilities of smartphones and tablet devices. But other than using different hardware (admittedly, very convenient and often faster), has anything really changed?
- Is insurance now cheaper?
- Is pricing or underwriting more accurate?
- Have insurers eliminated certain inspections?
- Are claims settlements fairer?
- Have we discovered new predictive data sources?
- Has fraud decreased?
- The answer is, not really. But pictures might change everything.
Huge volumes of data support the insurance industry. Roughly 240 million private passenger type and light truck vehicles are on the road, and there are 100 million one- to four-family properties in the United States, not to mention condos and rental units. The policy and claims information for all those risks resides in the systems of several hundred carriers. However, only a tiny fraction of data records have any picture or image associated with the information. And most carriers have legacy systems with no capability to host pictures. But pictures are full of valuable information.
Pictures and the smartphone
Would customers be willing to upload a few pictures to their insurance carriers? We think so.
Generation Y (the Millennial generation, born in the ’80s) is completely comfortable being connected 24/7. Generation Z (born starting in 1995) couldn’t imagine life without the Internet or cell phones. And images (pictures) are just a natural part of the landscape — think Facebook, Twitter, LinkedIn, Zillow, eBay, and Craigslist. People are becoming very comfortable sharing information, including images. It’s no longer an imposition. People expect it — except the small percentage who might be hiding something.
A win-win for policyholders and carriers
Insurance is highly competitive, and the market is growing very slowly. Growth comes from grabbing market share. Pricing and discounts are important. But accurate rating and controlling fraud are more important than ever, especially as more shopping occurs in the direct and mobile channels.
What if a carrier offered a discount or other benefits in exchange for a few images of the vehicle or home?
A win for policyholders
- a discount or benefit at new business
- continued discount at renewal (in exchange for updated photos)
- assurance that the insurance company “knows my car or home”
- assurance that, in the event of a claim, pictures will help with a fair settlement
A win for carriers
- better ongoing connection with policyholders (think retention impact)
- baseline photos for claims
- deter fraudsters — they won’t want photos “on the record”
- identify rating errors (whether accidental or deliberate)
The bottom line: Pictures contain valuable information.
An alternative to property insurance inspections
Property inspections cost insurers about $100 million annually. You need to assess new methods to get the same information for less. Aerial imagery will soon be a viable alternative to exterior inspections, but if you need an internal inspection to complement an aerial image, how can you accomplish that without sending someone to the property? With smartphones.
The smartphone can guide insurance buyers through a short trip around their homes to take photos and document the necessary information to complete an internal inspection. Ask questions about property characteristics, kitchen and bath quality, presence of a pool, family dog, and anything else.
The smartphone camera will let homeowners take photos of the kitchen, the breaker box or fuses, heating/AC unit, water heater, or any other component for which you need a visual image. Time stamping and geocoding embedded in the photo will ensure the photo is current and taken at the property address.
As a value-add, you can incorporate a contents inventory and store the information on behalf of your customer. Not only does that benefit the customer, but it will also identify if any possessions from the property require additional coverage.
Verisk is developing mobile inspection applications designed to help carriers connect with their customers, attract new customers, and use mobile technology for more accurate rating and fraud control. We welcome your suggestions and comments.