U.S. infrastructure bill lays foundation for personalized insurance
In its current form, the infrastructure bill helps insurance companies reduce risk while potentially raising prices as it moves towards a more tailored approach. The requirement to have technology that identifies impaired drivers, provides automatic emergency braking, or protects infants from being accidentally left in a hot car will change the way insurers identify and bill. the risk. It will also be necessary to have a system to determine which cars have specific technologies and who makes them.
Define auto risk profiles
According to the US Department of Transportation’s National Highway Traffic Safety Administration, 38,680 people died in auto crashes in the United States in 2020, up 7% from the 36,096 killed in 2019. This was the biggest increase since 2007, and that was an interesting anomaly given that there was a 13.2% drop in the number of actual kilometers driven during the pandemic.
Rather than asking manufacturers to set the criteria, the infrastructure bill will require minimum performance standards for specific security systems and automobiles. These technologies will undoubtedly reduce accidents and make roads safer, and they will also increase repair costs in the event of an accident. However, the technologies put forward in the infrastructure bill are too expensive.
Due to safety equipment regulations, the vehicle will need to be scanned after an accident or damage to make sure everything is still working properly. If the equipment is not destroyed in an accident, the mere presence of the security system will drive up the price.
In the future, there will be fewer accidents, which means fewer insurance claims. Fewer accidents help keep premiums low for everyone. On the other hand, the higher maintenance expense for crashing vehicles will offset some of the benefits of a decrease in the number of collisions. If you have a lot of accidents and penalties, you will pay more. In addition to this, the vehicle’s system will play a role. If you drive a vehicle that has safety features and are involved in fewer accidents, your insurance rate will likely reflect this.
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The inclusion in the bill of mandatory safety technologies and the promotion of more environmentally friendly electric vehicles will result in higher spending, as the infrastructure will have to support them as well. However, these technologies will allow even more personalization in the insurance industry.
More alternatives and diversity will be available through investment in electric vehicles, allowing for greater customization. These technological advancements could lead to faster innovation in driverless cars, which has been in development for years.
The part of the infrastructure bill that talks about the “use per kilometer” of highways will also have an impact on personalized insurance. For example, if a person lives on the West Coast and wants a car, they could rent a self-driving electric car instead of Uber, and they could purchase specialized insurance for the vehicle that drives them.
The infrastructure bill would certainly help small start-ups because they are the ones who bring technology and innovation to giant companies. Experts also expect more demand for insurance innovators in the future.
Lyle Solomon is Senior Counsel for the Oak View Law Group in California. Contact him at [email protected].
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