Online Auto Insurance: Feds Test, but Insurers Wait on V2V Tech
August 23, 2012 (PRLEAP.COM) Business NewsFederal officials commenced the second phase of testing vehicle-to-vehicle (V2V) technology Tuesday, advancing the technology's possible eventual entrance in the market as insurers wait on what kind of benefits and drawbacks it brings to cars, according to Online Auto Insurance.
V2V technology enables cars to communicate with each other through wireless networks, helping to avoid such roadway hazards as blind-spot collisions and rear-end accidents from cars suddenly stopping.
It might be easy to believe that the technology's testing-the first to be conducted on roads-heralds an industry sea change in which the number of crashes drops significantly, creating more low cost auto insurance options in the market.
A report this year from consulting firm Celent predicted such a turn of events, saying technology would push the number of accidents down along with the cost of premiums, leading to an upended market in which insurers battled each other over shrinking revenue sources.
But the road to those occurrences isn't clear-cut, even with federal officials pushing the development of V2V technology.
Loretta Worters, vice president of communications for the Insurance Information Institute (III), said in an interview that although V2V technology "holds great promise," it will have to go a much longer way in convincing insurers that it can reduce the number of claims or claims severity.
It takes several years, even after a car technology is introduced to the market, for insurers to gather enough claims data to link that technology to lower claims numbers and reduced losses, according to Worters.
But once a technology can prove it works, premiums for cars equipped with that technology can fall.
A June study from the National Highway Traffic Safety Administration (NHTSA) found a signification reduction in rollover crashes for car models made between 2000 and 2008, linking some of the drop to the introduction of electronic stability control (ESC) during that time.
According to Worters, enough ESC data has been gathered to conclude that, if it was standard in all cars, it could prevent as many as 10,000 crash-related deaths a year and reduces fatal single-vehicle crashes involving rollovers by 80 percent for SUVs and 77 percent for cars. It would also reduce the risk of fatal multiple-vehicle crashes by 32 percent, she said.
Many insurers have responded by offering discounts on collision coverage for vehicles equipped with ESC, Worters said.
The same may happen with V2V, but it's likely to take years.
For more on this and related issues, head to http://www.onlineautoinsurance.com/low-cost/ for access to an easy-to-use quote-comparison generator and informative resource pages.
Online Auto, LLC
Online Auto, LLC