iStock-464576790.jpgWe can’t predict the future. If we could, you’d find us studying racehorses and Wall Street stocks instead of talking about how the ever-evolving insurance industry could affect repair shops in the future. But that’s what we’re here to discuss. And it’s worthy of a moment of your time.

With that disclaimer about predictions, we do know one thing: the customer is king.

These days this applies to every industry. We’re sure you believe your customers are the most important part of your business. The same goes for auto insurers. And listening to the customer has become the easiest way for many insurers to ensure they’re providing services their customers value.

The most recent evolution of this is Usage-Based Insurance, or UBI.

As you’re undoubtedly aware, UBI takes several factors into consideration when it comes to the rate a company charges its drivers—when, where and how someone drives. In the past, drivers were able to self-report the “when” and “where” of that equation. Just the distance between a person’s home and work locations was a major influencer on rates, since more time on the road meant an increased possibility of collision. But “how” a person drives was based on the frequency of a users’ contact with law enforcement (in the form of tickets) or their unfortunate contact with other vehicles.

That system can’t account for the reality of driving, though. Some bad drivers are lucky. They avoid getting pulled over by the police and having frequent collisions. On the other hand, some good drivers are unlucky. You can go decades without an accident. Then, you have a bad day and—wham!—your insurance carrier ups your rates or drops you altogether.

Enter Usage-Based Insurance.

Initially, an insurer simply connects a customer’s car to a device that collects realtime data about their driving habits. Today, those devices can also measure impact force and other details of collision. That’s good news for repair shops, right? After all, detailed data about an impact and its effects on a vehicle helps provide the most accurate repair possible.

Theoretically, yes—although the data needs to be as accurate as possible. Some insurers’ tech devices are better than others in this area. But accurate impact data isn’t the only concern for repair shops. Another risk comes in the form of customers’ expectations of an insurer’s technology to make their lives easier.

As we said, the customer is king. And the king wants convenience. In many ways, life is now a lot more complicated than it was just a couple of decades ago. That’s the irony of technology. Technology was meant to simplify our lives. But technology has connected us to virtually every aspect of our life. That connection is hard to manage for many people, so we need even more technology to decrease the time it takes to manage those connections.

When it comes to auto insurance, policyholders want technology to make things like collisions and collision repair easier. This convenience for the customer can have many downstream repercussions for repair shops.

Let’s say a person is involved in a collision. Their UBI-based technology pushes a notification to their phone almost instantly about local repair shops that can fix the damage. Of course, the listed repair shops are all part of the insurance company’s Direct Repair Program (DRP). Many customers don’t understand they’re able to go outside of their insurance company’s DRP shops, though—so if you’re not on those lists, you face a severe disadvantage. The customer’s gain in convenience is a potential loss for your business.

But the challenges you’ll face go beyond the shops an insurance company touts.In a recent Gartner survey, 43% of respondents said that they’d prefer to use an app on their smartphone to make an insurance claim. In the same survey, 23% wanted to use an app to schedule vehicle repair.

When it comes to these preferences, you can count on two things. First, those numbers will continue to increase over time. Second, insurers will do everything they can to fulfill those customer preferences. In fact, most major insurers have developed or are developing mobile applications that use UBI-based technology to assist—or even replace—the human element of claims submission. One industry expert believes that by 2022 at least half of all claims will be filed by the vehicle soon after a collision. In other words, no agents or other middlemen necessary.

As this technology develops, we’ll update you on the challenges and opportunities that arise. Until then, stay in front of your possible customers as much as possible, so they think of your shop in the unfortunate event of a collision. And don’t forget to occasionally contact your local insurance companies and agents to remain top of mind, even when you’re not involved in their DRP.