2021 Innovation and Insurance Report: EVs, Cryptocurrency, Solar and Telemedicine
BY MICHAEL GIUSTI
While innovation isn’t the first thing most people think of when the topic of insurance comes up, changes are afoot in the insurance industry to help protect today’s consumers from emerging risks.
In nearly every corner, insurance is growing to meet today’s needs.
InsuranceQuotes conducted a survey of more than 1,000 consumers to gauge their interest in new technology, as well as the insurance options to protect them.
Our survey found that consumers are buying into the idea of electric vehicles, that more insurance options are needed for cryptocurrency, that rooftop home solar is the future, and that an increasing number of patients are embracing telemedicine.
How People Feel About Electric Vehicles and Insurance
Nearly every automaker has rolled out plans to convert their fleet to an electric model within a decade, and most consumers now see electric vehicles as the transportation of the future. And automakers aren’t making those plans on an island. Our survey found that 65% of Americans say that for their next car, they will consider an electric vehicle.
That is an astounding shift in recent years, and it may come from a combination of the success of some high-profile electric vehicles, such as Tesla, as well as a growing investment in the nationwide charging infrastructure, easing their so-called range anxiety – the worry that they will be stuck away from home with a dead battery and nowhere to charge back up.
Unfortunately for consumers, even though electric vehicles are becoming more attractive, they haven’t hit a critical mass yet needed to drive market forces in areas like mechanics and spare parts.
Because only select mechanics are certified to repair electric vehicles, the ones who are can charge a premium when something goes wrong. The same goes for spare parts makers. Because there just aren’t as many electric vehicles on the road, the only option if something breaks is to replace it with parts from the original manufacturer, which are notoriously more expensive.
And so, because electric vehicles tend to cost more to repair after accidents, their car insurance tends to cost more — a few hundred dollars a year or more depending on where you live, what model you drive, and your driving history. Insurance costs drive up the cost of ownership, so many people are hoping that to encourage the more environmentally friendly vehicles to be more widely adopted, those costs should come down.
In our survey, we found that 75% of Americans say that they would be in favor of legislation providing auto insurance discounts for electric vehicle drivers.
For its part, Tesla has stepped in to try to bring down the cost of insurance. The electric vehicle-maker has partnered with an insurance carrier to offer Tesla-branded insurance in a few select markets.
Capitalizing on the onboard technology of the vehicles, Tesla downloads driving data from every model on the road. It anonymizes that data and then the insurer uses the aggregate data of how typical Tesla drivers behave on the road, along with loss data for Teslas, with the aim of driving down insurance costs for their vehicles.
Tesla points to much of its standard passive and active safety equipment as the reason for those lower rates.
Only Teslas are eligible for this specialized coverage. But in the markets it is being offered, some people are seeing significant savings over other insurers.
Cryptocurrency Insurance in an Expanding Universe
What started as an attempt to wrest control of the money supply from the hands of governments and central banks, cryptocurrency has largely gone mainstream.
Cryptocurrency exchange, Coinbase, went public on the NASDAQ stock exchange earlier this year. And according to our survey, 25% of Americans say they are invested in Bitcoin.
But because of the decentralized nature of cryptocurrency, there are no government agencies you could call if your coins were stolen or if you lost your key. And horror stories abound.
So, with the explosion of cryptocurrency popularity, along with its accompanying risk, many people are turning to insurance companies to help manage those risks.
Unfortunately, cryptocurrency insurance is still a bit of a fringe market, with only a handful of traditional insurers writing policies to protect coins.
Some of the cryptocurrency marketplaces are also offering some policies. There are still only a few options — but that may soon change. In our survey, 64% of Americans say that they expect the cryptocurrency insurance market to expand over the next 3 to 5 years.
Cryptocurrency comes in a few basic types: crime insurance, custody insurance, business insurance, and decentralized finance insurance. The crime insurance policies are there in case someone steals your coins, either by somehow acquiring your key, or by embezzlement.
Custody insurance is there in case you simply lose your key or otherwise no longer have access to your wallet.
The business policies come in the form of professional indemnity and directors and officers coverage. And the decentralized finance policies, known as DeFi, are there to ensure the cryptocurrency technology and software itself delivers what is promised.
Coincover, based in the United Kingdom, is one of the companies offering insurance on people’s cryptocurrency.
“At Coincover we are the safety standard for crypto, and we deliver to cryptocurrency holders the same type of protection the FDIC provides for bank deposits,” said Sharon Henley, CPO of Coincover.
Henley said it is important to read the fine print and ask good questions before purchasing a cryptocurrency insurance policy, such as who is in control of the keys, how are those keys protected and who has access to them, if funds are lent out to other exchanges (which can increase the risk for potential fraud), and is there a deductible in the case of a claim.
Companies like Coincover are also looking for some other innovative new ways to provide protection to cryptocurrency owners. “We are seeing a lot more interest for our cryptocurrency wills product. When the value of crypto increases, more and more people want to have a safe way to give it to loved ones in the case of their death,” Henley said.
Even with the insurance options that are now available, there are only enough policies available to insure a small fraction of the cryptocurrency that is in circulation. As cryptocurrency further expands into the mainstream, expect more and more insurers to step in with new coverage options.
What About Insurance Incentives for Home Solar?
Rooftop solar has been exploding in popularity of late. Driven by government incentives, energy buyback programs from utilities, and inexpensive new solar panels, demand has boomed.
In the past 10 years alone, rooftop solar has grown by 42%. Nearly 100 gigawats of power is now generated directly from the sun. And industry watchers expect solar to remain popular in the coming years.
According to our survey, 81% of Americans believe that solar technology is the future of home energy systems.
And thankfully for homeowners with solar panels on their rooftops, those installations are covered by almost every standard homeowner’s policy. That is because they are considered permanent additions to the structure.
Because a solar installation may increase the value of the home, homeowners should tell their agent about any new solar system install to make sure the homeowner’s policy limits are sufficient in the case of a major loss.
And if someone uses a non-traditional installation, such as putting solar panels on a detached garage, or a shed, or even just ground-mounted solar, it is especially important to tell the agent, because those may not be covered without an additional rider or policy.
As adoption becomes more widespread, many consumers would like to see further incentives to install home-based clean power. In our survey, 76% of Americans believe that solar-powered homeowners should get a discount on their home insurance.
While such discounts aren’t yet common, lower premiums might provide just another attractive incentive to encourage homeowners to adopt carbon-free power generation right at home.
How Will Telemedicine Change Health Insurance?
The pandemic drove most parts of our lives onto a computer screen. And health care is no different.
Pre-pandemic, a combination of spotty broadband coverage, state-by-state regulation, and inconsistent insurance coverage meant that telemedicine was the exception, rather than the rule when it came to health care.
In its most basic form, telemedicine is simply a doctor using some form of technology to remotely deliver health care to a patient. Every state offers some form of regulation allowing for telemedicine, but the rules are not consistent.
Some states say that the only way telemedicine should be covered by health insurance is if both the doctor and the patient are using real-time video and audio to communicate. In some states, real-time audio is sufficient.
And at the federal level, the Centers for Medicare and Medicaid Services made a rule change in December 2020 that will permanently expand some telemedicine services for federally covered programs.
By one estimate, as many as 63 million people who were enrolled in Medicare used some form of telemedicine during the pandemic.
And the trend was evident in private policies as well, with telemedicine usage growing by a whopping 3,000% increase. Our survey found 45% of Americans say that whenever possible, they do telemedicine doctor appointments rather than in-person visits.
In addition, 38% of Americans say that when selecting their next health insurance policy, they will prioritize telemedicine coverage.
Health care providers admit that telemedicine is not ideal for every situation — it isn’t easy to listen to a heartbeat or a patient’s lungs from the other side of a computer screen.
But for many other forms of care, such as mental health, dermatology, and many other routine visits, telemedicine may be coming into its own.
And that is not even taking into account the potential for telemedicine extending the treatment options for rural and remote providers, such as a cardiologist monitoring a patient’s diagnostic readings remotely, or a radiologist reading an x-ray from across the country.
Telemedicine was obviously useful for patients who were in mandated lockdowns and who were weary of leaving their homes and getting exposed to the pandemic. But other people realized that being able to log in to talk to a doctor may mean that they don’t have to find child care, or take time off work.
With broadband expanding all the time, and with patients growing ever more comfortable using technology, the future looks bright for telemedicine.
Insurance Like All Things Must Evolve
From its origins covering European shipping concerns in the 14th century, insurance has tended to be a conservative industry. But, just like the rest of the world, change is coming fast, and insurance in nearly every segment of the industry is working hard to change along with it.
Environmentally friendly electric vehicles will continue to pick up speed in the market, and with broader adoption should come lower insurance costs.
Cryptocurrency started as the Wild West of money, but as it has matured, it has drawn the interest of companies looking to insure owners from risk. As the market gets bigger, it is likely that more policies will emerge, with more players offering coverage.
Rooftop solar is rapidly becoming a major segment of the nation’s power supply, and as more people put panels on their roofs, more people are looking for ways to incentivize further adoption.
And with the pandemic, telemedicine was able to shine and prove itself as a viable health care delivery vehicle. Insurers and regulators have taken notice, as have patients, opening up the technology for potential future growth.
The next phase of insurance innovation will likely be in the form of ‘insuretech’—or technology startups focusing on the insurance industry
Already, insuretech trailblazers are using geospacial data and high-resolution arial photography to help with the underwriting and claims adjustment processes. Coupled with predictive analytics, they are aiming to reshape the insurance company-customer relationship.
Innovation happens fast, and in places you don’t always expect it. And as things evolve, the insurance industry is growing right alongside it.
The survey for insuranceQuotes’ Innovation and Insurance Report was conducted online using Survey Monkey. The national sample of 1,081 adults spans across U.S. geographic regions and income levels and was weighted to reflect the gender distribution and the age distribution across the 18-44 and 45+ age brackets in U.S. census data.