Response time

The black box had just been introduced when I first started working insurance.  That early model could monitor the vehicle speed, braking, blinkers, and seat belts.  That helped clear up a good deal of confusion and dishonesty.  At the time, it was scandalous.

blackbox

One of the first big cases where it was used to identify accident details was the 1992 crash involving Jerome Brown, the Philadelphia Eagles’ star defensive tackle, and his 12-year-old nephew were killed.  Their car, a new Corvette, skidded out of control on wet pavement, hit a palm tree and overturned.  Due in part to the evidence in the black box GM was cleared of any wrong doing in a 1999 lawsuit brought by Jerome’s parents.

Back then, the states battled back and forth with different laws regarding who had access and who did not have access to the recordings.  Some said it was law enforcement, some argued for insurance, while others said just the driver/owner of the vehicle had access.  There were suggestions that supoenas would fly and/or it was proprietary to the manufacturer.  After all, supposedly this was just devised by manufacturers for ‘marketing reasons’.

But the black box showed up at the right time.  It was in the early nineties when many of the states started to organize and mandate their fraud units.  Back then insurance fraud was rampant and unchecked.  Reports back then say 50% plus claims were possible fraud.

We have come a long way since then.  The NICB (National Insurance Crime Bureau) claims 10% of claims are fraudulent nowadays.  We can attribute this to additional technology like usage based in-vehicle monitors, GPS, cameras (in vehicle and out), and additional technology from Verisk (or ISO).

It is a case of careful what you wish for, since we can now solve a claim with an algorithm in less than sixty seconds, underwriters can hire out drones to look at properties for consideration, and there are many other advances on the Insurtech horizon.

Of course we have to also consider the driverless car technology.  I would guess in the next 20 years, fraud will be down to 1%.   It may come even sooner.  That would put a lot of those SIU departments out of business.

The real disrupter will be how the criminals and fraudsters beat the new systems – and how the new technology responds.  Do they have anything in place now to subvert the chances?  Or is there something new being introduced for ‘marketing reasons’ that will save the day?

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