Crash Detection: Real Transformation For Auto Claims – No, Really
by Stephen Applebaum and Alan Demers —
Too many headlines contain wild hyperbole meant to grab readers’ attention while also conveying the enthusiasm of the author. In particular, the word “transformation” has been severely overused and often misplaced, particularly when applied to the auto insurance claims process. That is not the case here.
It is our opinion, as subject matter experts in Auto Physical Damage claims information technology, that the more sophisticated Crash Detection as defined here will indeed be transformative to auto claims in multiple senses of that word.
But first it is critical to understand the relationship between various Telematics programs and Crash Detection technologies, not all of which are useful in the Auto Insurance industry – and even fewer yet to the claims process.
Telematics: A Brief History
Telematics, in one iteration or another, has been around since GM introduced its OnStar in-vehicle telematics technology and related safety services. OnStar was initially a dealer-installed device offered in several 1997 Cadillac models. OnStar enabled drivers to connect from their cars with safety advisors in the event of an accident, breakdown or other roadside emergency.
Since then, the convergence of telecommunications and information processing – broadly referred to as ‘telematics’ – enabled the use of information such as vehicle location, driver behaviour, engine performance and vehicle activity. Numerous Telematics Service Providers (TSPs) emerged globally to offer a wide variety of use cases across a number of market verticals. In 2002, Octo Telematics was founded in Italy specifically for use cases in the auto insurance industry, originally including fraud, theft and location services.
These early applications required the installation of some type of in-vehicle hardware device (dongles, sensors, windshield tags, etc.). TSP solutions included commercial applications for fleet management as well as personal lines auto insurance applications including Usage Based Insurance (UBI), Pay-As-You-Drive (PAYD) and others.
In 2015, a smartphone app-based driver behavior tech company was spun out of Harvard Innovation Labs. Censio was renamed True Motion and was acquired by Cambridge Mobile Telematics (CMT) in 2021. The company’s mission was safer and more affordable driving. CMT has grown to become the world leader in telematics and powers many of the largest insurance telematics programs in the U.S. and globally.
Consumer adoption within the auto insurance landscape still remains in the low double digits but continues to gain traction as loss costs and premiums continue to rise and consumers seek savings options. And adoption in North America has lagged other global markets for a variety of regulatory and cultural reasons.
More recently, a specific application of Telematics – namely Crash Detection – has emerged as new model smartphones include high dynamic range gyroscopes, GPS location, barometers, microphones, and advanced motion algorithms which can detect a crash.
Accident Detection and False Positives
With the introduction of smartphone accident detection in 2015 by Zendrive, a driver-centric analytics company, variations of Crash Detection began to emerge, mostly for purposes of notifying emergency services, tow trucks and family members. Other applications included the gathering of accident- related data for future use in insurance claims.
Most recently, there have been a number of stories about new model smartphones and connected devices with Crash Detection features alerting early responders to crashes – both real and erroneous.
But beyond these kinds of Crash Detection, another application is emerging for use specifically in auto insurance accident claims which has the potential to truly transform this process by materially lowering claims costs by up to $1,000 per claim and eliminating the historical delay in the traditional accident reporting process which averages 5 days from accident to first notice of loss.
Crash Detection and the Auto Insurance Claims Process
Before any insurer would consider deploying a Crash Detection program, there are two critical technical issues to be overcome; namely accuracy in detecting real accidents (at speeds below 25 mph) and the elimination of “false positives” in which sensors misinterpret motion as accidents when it may be something as simple as an accidentally dropped phone, energetic dancing at the Bonnaroo festival or a wild ride on a roller coaster.
No carrier would want to waste valuable resources and risk annoying their policyholders by contacting them unnecessarily when no accident has occurred. On the other hand, all carriers would find it valuable to be alerted to real crashes in real time. In addition, documented crash details would have great value in the future.
Right on cue just last month Sfara, a global telematics technology provider who launched the first mobile phone based crash detection in 2014, introduced the World’s First All-Speed Crash Detection, Including ZeroMotion. These capabilities solve both of the above technical issues. Low speed accident detection for claims is more valuable than many may think. Sfara research reveals that 70% of crashes occur under 25 mph as do 48% of crashes involving injuries. And 11% of fatalities occur when a vehicle is not moving at all. Further, this solution captures the additional 70% of auto crashes that other solutions miss by solely detecting high speed accidents.
Sfara Crash Detection
In addition to the valuable capabilities outlined above, Sfara has formed strategic partnerships with Mercedes Benz, Bosch, CCC Intelligent Solutions, the industry’s leading auto insurance physical damage information provider, and Solera eDriving, a global digital driver risk management provider for fleets. These relationships enable insurance companies and fleets who are already integrated with these companies’ solutions to operationalize Sfara’s Crash Detection results quickly and easily through the simple addition of the Sfara SDK to their flagship smartphone apps. Several Top 10 carriers have already begun. Thus, real Crash Detection becomes available to all policyholders, not just the minority who are enrolled in telematics programs.
The distinction between basic Crash Detection and all-speed, false positive free Crash Detection is critical for effective deployment in an auto insurance claims application.
Furthermore, incorporating a single source solution will accelerate market deployments. According to Sfara’s website they are a comprehensive service provider, incorporating All Speed Crash Detection, emergency services, Claims acceleration and UBI data through a single platform.
Insurer Adoption
Crash Detection, and its first cousin Accident Response, are poised to see real traction by auto insurers.
In September 2023 State Farm joined USAA, who incorporated Crash Detection capabilities into their respective mobile applications a year earlier. And in February 2023, Progressive Insurance announced the planned introduction of their app-based Accident Response service to offer towing, emergency services, and to start a claim after an accident.
Importantly however, none of these programs have indicated that they can offer service at all speeds.
The Future
Real Crash Detection, such as that offered by Sfara is poised for rapid adoption by auto insurers and will literally transform the auto insurance claims process, including First Notice of Loss (FNOL) which has historically occurred many days after an accident and been labor intense. Crash Detection will enable digital FNOL in real time and can include accident management, triage of roadside services, automated scheduling of vehicle repairs, photo estimating, parts ordering, and other use cases not yet envisioned. And because it is low to no touch and technology powered its cost to carriers will be nominal.
Crash Detection will also be attractive to carriers because it is perfectly aligned with emerging claims process digitization initiatives and will significantly reduce loss costs, thus materially improving Combined Ratios. It is also well aligned with the industry’s strategic shift underway in claims strategy from a ‘repair and replace’ to a ‘predict and prevent’ mindset; Crash Detection can be the portal through which future advances in which vehicle and driver safety can be delivered. Real time Crash Detection and FNOL will help transform the traditional mindset in claims operations to focus on speed of resoluton. Equally valuable is the crash data captured with detection which is instrumental in the claim investigation process. Think of it as an unbiased “witness” gathering all the critical information, speed, direction of travel, point of impact and more.
Auto insurance financial performance is under extreme pressure as costs continue to rise, vehicle complexity is sure to increase, the workforce is aging out and taking critical expertise with them and higher insurance premiums are unsustainable and are meeting resistance from regulators. Crash Detection can deliver significant relief quickly and at low cost.
Policyholders will embrace Crash Detection once they understand that it is all upside and no downside. Emergency services and accident response will be especially welcome as will the elimination of aggravating phone calls repeating accident details to multiple agents. Claims resolution and cycle times, including the return of repaired vehicles, will be materially improved.
Auto insurance ecosystem partners will see operational benefits and savings through increased real time, digitally integrated workflow and the elimination of legacy communications and labor intense processes.
Call To Action
With the arrival of true Crash Detection, auto insurers should learn, test, pilot and implement this technology as one of their highest priorities. Their stakeholders and partners will be most appreciative and their customers will reward them with greater loyalty.
Crash Detection will transform auto claims and become table stakes and it will be no accident – and that is definitely not hyperbole.
About the Authors
Stephen E. Applebaum, Managing Partner, Insurance Solutions Group, is a subject matter expert and thought leader providing consulting, advisory, research and strategic M&A services to participants across the entire North American property/casualty insurance ecosystem focused on insurance information technology, claims, innovation, disruption, supply chain, vendor and performance management. Mr. Applebaum is also a Senior Advisor to Waller Helms Advisors. WHA is the premier investment banking boutique focused on the crossroads of the Insurance, Healthcare and Investment Services sectors.
Stephen is a frequent chairman, guest speaker and panelist at insurance industry conferences and contributor to major insurance industry publications and has a passion for coaching, mentoring, business process innovation and constructive transformation, applying disruptive technology, and managing organizational change in the North American property/casualty insurance industry and trading partner communities. He can be reached at [email protected].
Alan Demers is founder and president of InsurTech Consulting LLC, with 30 years of P&C insurance claims experience, providing consultative services focused on innovating claims. After initiating and leading claims innovation at Nationwide, Demers collaborates in the forefront of InsurTech, partnering with insurance leaders, startups, design thinking experts and service providers to modernize personal, commercial and specialty claims.
As Vice President of Claims Innovation at Nationwide, Alan conceptualized a vision and road map to build next-generation claims, automating and digitizing claims experiences, progressing from inception through prototype testing. He served as a founding member of the Corporate Innovation Council and played a key leadership role in establishing goals, practices and an innovative culture at Nationwide.
Alan is an accomplished executive leader and has worked for two separate Fortune 100 insurance companies in a number of corporate, national and regional leadership roles among personal, commercial, non-standard and specialty lines claims. Prior to leading claims innovation, he served as head of claims for Nationwide’s commercial agribusiness and non-standard claims. Other noteworthy roles include: field vice president, regional claims officer and national catastrophe director, quality assurance director.
Alan began his career with Aetna as a claim adjuster and advanced to a corporate claim consultant, prior to joining Nationwide in 1995.
