Technology and artificial intelligence (AI) are transforming industries, and insurance is no exception. Many clients are asking how these advancements will impact their premiums in the future. The reality is, technology is a double-edged sword—it brings both benefits and challenges to insurance costs.
The Pros: A Safer Workplace
One of the biggest advantages of technology is its role in improving workplace safety, particularly in workers’ compensation. Many hazardous jobs once performed by employees on assembly lines are now automated, reducing the risk of workplace injuries. This shift leads to fewer claims and, in turn, lower premiums for businesses that embrace automation.
The Cons: Auto Insurance Challenges
While automation enhances workplace safety, technology is creating new risks in auto insurance. Distracted driving has surged, largely due to texting and phone use behind the wheel. Research shows that texting while driving increases the likelihood of an accident by 23 times, and as a result, accident rates have risen 35% in the past two years.
In addition, vehicle repairs are now more expensive than ever. A bumper that once cost $200 to replace can now exceed $1,000, thanks to the need for recalibrating sensors and cameras. With labor costs also rising, physical damage claims are becoming significantly more expensive for insurers.
Technology: The Problem and the Solution
Ironically, the same technology that contributes to rising claims is also the key to mitigating risk. Many companies are now turning to telematics and dash cams to monitor driver behavior and improve road safety. These tools help ensure that drivers remain awake, alert, and focused, reducing the risk of accidents and, ultimately, keeping insurance costs under control.
As technology continues to evolve, insurance premiums will be shaped by how businesses and individuals choose to leverage these innovations. Those who proactively implement safety measures will be best positioned to manage risks and maintain more favorable insurance rates.