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Hands-Free Distractions, Google Coming and Going in Insurance, Insurance Myths

Posted By Thom Young (Full first name: Thomas Clifford John), March 1, 2016
Well, here I am blowing past my own production deadlines once again. To shatter the misconception out there that I’m retired, the truth is that I’m often very busy managing many different projects for both my business and my involvement in our industry. True, some days are filled with long walks on the beach, but others are filled with trying to get a couple thousand legible and entertaining words onto a document or preparing a critical review of the educational standards by which we approve people for different license levels in our business. When those objectives overlap, often the beach wins!

The half dozen responses on the last issue were heartening to receive. I guess some sensed that I was questioning my commitment to continuing this project. Fear not, I still enjoy the work, although sometimes it’s easier to accomplish than others. I usually clip your responses and save them in a newsletter topic file that is constantly undergoing revision. I’m often asked where I get the ideas for the things I ramble on about. These emails are a great source. They often stimulate further dialogue on the issue. I receive 40 to 60 emails every day. Some come from RSS feeds that I have set up to monitor the media reports on our business and its issues and some come from readers like you who want my ideas on some topic. All direct inquiries get a direct response . . . eventually. I also read many industry journals that keep me up to date on issues. Beyond those sources, I interact with many of you at different functions and events and make notes of our discussions. So far, one issue or another always seems to get legs. When I run out of ideas, you’ll be the first to know.

For the record though, I’d like to acknowledge and thank those who’ve written me. Your kind words are the best compensation for the work I do on this project!

Think Hands-Free Means Safer Driving? Think Again

The other day, I was having a rather animated discussion with one of my automobiles. Yes, you read that correctly; I was arguing with my car. This vehicle is equipped with the most advanced voice-recognition technology and interpersonal interface available in the automobile world today which, in my view, is saying that it is programmed to frustrate. It returns every turn of phrase I make and every verbal direction with a question that is irrelevant to what I am trying to accomplish. When this inanity leaves me without a civil response, it responds to profanity with “Pardon, please rephrase the question.” Then it adds to my frustration by ignoring any attempt to override the voice feature by manual input. In short, I’m not getting along very well with this car. My other car has a similar feature and the relationship there isn’t much better.

The real point of this amusing anecdote is that I’m experiencing these frustrations with a device that’s supposed to make my use of it easier all the while I’m hurtling down a busy freeway at 105 kilometres per hour or more. I’m using a hands-free device to avoid being in violation of the distracted-driving legislation but find myself more distracted than I would have been by simply picking up my phone or GPS unit and initiating the interaction manually. So much for public safety under the law.

I’ve always taken the approach that distracted-driving legislation is a necessary response to the real problem of people who won’t discipline themselves and drive properly. Granted, driving while texting, watching a movie, reading a book or newspaper, putting on makeup, or plucking eyebrows distracts from attention to the road and its conditions. However, I contend that the accidents caused by people who do these things are not caused by distracted driving so much as by poor driving. If you’re a good driver, you understand the limitations and risks involved in undertaking anything while driving, whether that be drinking coffee or answering the phone. Technology may eventually limit the ability to be stupid while driving, except, of course, if you’re arguing with your car. New innovative software and technology is coming but not soon enough in my opinion as the technology in use in automobiles is about 10 years off the current mark and woefully inadequate to the task.

For years, we’ve been encouraged to use hands-free kits for mobile phones to avoid the danger of using only one hand on the wheel, but that practice may also be risky. A new study from the University of Utah has found that drivers take up to 27 seconds to regain full attention after using voice-activated commands on their phone or controlling the radio or other devices. Even systems that are deemed better at understanding and processing voice commands distract drivers for up to 15 seconds. Of the three main virtual assistants, Google Now was found to be the most intuitive and slightly less distracting than iPhone’s Siri and Microsoft’s Cortana. Some people are able to manage these distractions better than others through avoidance and practice, others not so much.

The argument on electronically distracted driving will never really end until the technology eliminates the discussion by mitigating the dangers in the activity. For the insurance business, the answers are in a review of the numbers. Arizona has no distracted driving legislation for using a telephone or other electronic device, but it maintains comparable loss ratios to other jurisdictions. It also has some of the lowest automobile insurance rates in the U.S. and doesn’t seem be in any crisis . . . yet.

Don’t get me wrong. If you’re weaving all over the highway putting on your makeup or texting, the Arizona Highway Patrol has the legislative authority to cite you for driving incorrectly. You just won’t get charged for having a telephone up to your ear.

Google Is Coming, Google Is Coming, . . . Google Is Going?

Several months ago, much ado arose about the possibility of Google entering our Canadian market and introducing price comparison links for automobile insurance. You may be interested to note that Google has globally abandoned its price comparison efforts. I guess it was too complicated to be profitable. Rumors continue to swirl that Google’s parent company, Alphabet, may make inroads on the life side by buying AIG’s operations, but most of the people I know in the life insurance part of the business claim that it’s just wishful thinking on the part of the sales and distribution network that would like to see some stability in ownership of AIG that would add confidence to their operations. Who knows, but insurance, particularly property insurance, remains a complicated relationship-based commodity. Those who try to operate outside of that model quickly find themselves at odds with their customers when the service issues arise.

Insurance Myths and Misunderstandings

When you finish your presentation to your clients and see them to the door, do you believe you’ve really made that connection described as the meeting of the minds on the main issues? Are you mostly convinced that the customers have a good understanding of the coverage you’ve arranged, the reason you put it together that way, and the manner in which it will work for them if they sustain a loss? The Insure.com survey says that, for the vast majority of clients, the process is lost to them. It’s a good exercise for insurance professionals to review this survey so that they can focus on the confused points when discussing them with clients.

A survey of 2,000 adults asking whether eight insurance-related statements were true or false revealed some interesting insights as to just what your client doesn’t know about insurance.

The Insure.com survey, which all the questions asked were false, found the most common sources of misinformation extended from insurance for houses and red cars.

For instance, 52 per cent of respondents were confused about how to properly insure a house with many of them believing a house should be insured for its market value when in fact it should be insured on the basis of reconstruction costs.

Depending on location if individuals are insuring on the basis of market value they could be significantly under-insuring or over-insuring their homes.

Below are the myths, the realities and gender breakdown of those who believe the myths are true.

Myth 1: I should buy insurance coverage for my house based on its real estate market value.

  • 52 per cent think it's true (45 per cent women, 55 per cent men).
    Reality: Buy coverage based on a home’s cost to reconstruct (materials and labour).

Myth 2: Red cars cost more to insure because they get pulled over for speeding more.

  •  46 per cent think it's true (52 per cent women, 48 per cent men).
    Reality: Car colour doesn't affect insurance rates.

Myth 3: If I cause a crash with extensive damages to others, my auto insurance company can cancel me immediately.

  • 44 per cent think it's true (50 per cent women, 50 per cent men).
    Reality: If an insurer wants to drop a customer due to claims, it generally has to wait until the policy period is up.

Myth 4: Small cars are the cheapest to insure.

  • 40 per cent think it's true (42 per cent women, 58 per cent men).
    Reality: Small and mid-size SUVs and minivans are generally the cheapest to insure. Small cars are not, often because they're chosen by more inexperienced drivers who tend to make claims, and because passengers incur more expensive injury claims.

Myth 5: Comprehensive auto insurance covers everything and anything.

  • 32 per cent think it's true (41 per cent women, 59 per cent men).
    Reality: Comprehensive coverage is tragically misnamed. It covers only narrow portions of possible problems, including car theft, storm damage, animal collisions and vandalism.

Myth 6: Thieves prefer to steal new cars.

  • 29 per cent think it's true (42 per cent women, 58 per cent men).
    Reality: It's more lucrative to steal old cars and sell them for parts.

Myth 7: If my friend borrows my car and crashes it, their insurance will pay for damage.

  • 25 per cent think it's true (48 per cent women, 52 per cent men).
    Reality: You and your insurance are on the hook when someone else drives your car.

Myth 8: Out-of-province speeding tickets can't follow you home.

  • 13 per cent think it's true (34 per cent women, 66 per cent men).
    Reality: Oh yes they can.
(Insurance Business)

Keep those email comments coming. I really do appreciate the feedback.

The opinions expressed in this blog are not necessarily those of IBAA.
Comment on this post below or email Thom Young privately. Thom also encourages suggestions for topics.

 

Tags:  AIG  Alphabet  distracted driving  Google  hands-free technology  mobile phones  voice recognition  Young's Stuff subscription 

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