The Future of Auto Insurance and What It Means for You

Car insurance, it might not be the most exciting subject but the reality is that the industry is about to undergo its most significant change since it became a requirement to drive.  This is not an exaggeration, technology is set to revolutionize can insurance and the most important question for consumers is what it means for them.

The Sharing Economy

The rise of services such as Uber and Lyft are causing a massive rethink in car ownership.  One thing that hasn’t been lost is what this means for insurance – especially as ownership rates are expected to decline.

Given that most car owners use their vehicles less than 5 percent of the time, there is something to be said for not owning a car.  Younger generations have already accepted this as fewer are getting drivers licenses.

In fact, this marks a massive shift in American culture as getting a license used to be a sign of freedom.  However, younger generations want mobility without the burdens of ownership and this shift marks a threat to the existing insurance business model – one which relies on statutory requirements to drive demand.   As such, many insurers are shifting their approach and new products such as micro-insurance and passenger insurance are beginning to appear on the market.

These products offer an alternative to cheap car insurance options which had been marketed since the mid-1990’s.  While it is too early to know if alternative auto insurance products will become the norm, there is no doubting that the products represent a reaction to the challenges presented by mobility without ownership of the sharing economy.

Demographics

10 years ago, everyone was talking about ‘The Aging Society’.  However, times have changed and the attitudes of younger drivers are impacting the industry.  It’s not just Millennials, as most of this generational cohort has already reached the age of 30.  Instead, Digital Natives, or the so-called Generation Z, are driving (pardon the pun) the change in attitude.

For this generation, car ownership is seen as more of a burden than a liberator.  This is something that was unthinkable 50 years ago and while it is still early the impact of this change in attitude is reverberating through the car industry.

As mentioned, the sharing economy has risen out of this change in attitude.  But another driver is the rise of autonomous vehicles.  While they are still in the test state, these self-driving vehicles are poised to redefine transportation.

This change will impact insurance as well.  For example, questions of ownership and liability are already being considered by automakers, insurance companies, and automakers alike.  At the heart of the matter are the decisions that drivers make every day and, by extension, who should be held liable when those decisions lead to an accident.

While assigning liability is ‘fairly’ straightforward when there is a human driving, it becomes a more complicated question when the car is driving itself – not to mention when that self-driving car isn’t even owned by any of the occupants.

As such, we are probably witnessing the beginning of a 10- to 15-year process where states experiment with changes to the laws governing the auto insurance industry.  The outcome of these changes will decide the future of the industry.

Focus on Costs

Having a car used to be considered an important part of the American Dream; however, this is changing and with the new views come to an increased focus on the cost of auto insurance.  After all, why should one be forced to pay an exorbitant amount to insure an ‘asset’ they rarely use.

The change is not all bad.  In fact, the focus on cost is beginning to drive innovative insurance products.  These include discounts for ADAS (Advanced Driver Assistance Systems), trackers and other devices.  Not only do these devices allow drivers to get discounts based on their driving behavior, they are also helping insurance companies to better define the risk in their policy portfolios.

InsuranceTech

For insurers technology is not only a threat, it is an opportunity – mainly one to improve processes and reduce costs.  While not all these cost savings are passed on to policyholders, the companies who can more aggressively reduce their overhead while providing a world-class level of customer service tend to come out the winners.

Conclusion

The market for auto insurance is changing more rapidly than it has in years.  With these changes come opportunities for consumers to save on their policies.  For some, this is by doing away with car ownership altogether, while for others it is the integration of technology to track their driving behavior.

What will come next?  It is hard to tell, but the combined rise of self-driving cars and changing demographics point to an industry that will look dramatically different in 10- to 15-years.

Get Funding with Bad Credit A pay day loan is excellent choice

Having low credit or bad credit can be a demoralizing thing. No more so than when you need that credit to secure a loan. Your credit score affects your life in a multitude of ways. Having a good credit score allows you to secure the best rates on your mortgage, your auto loans, and even when refinancing your student loans.

Most people don’t realize that having bad credit doesn’t necessarily reflect on your spending habits. Responsible people can end up with bad credit for a few surprising reasons.

  1. Using only one credit card for everything

Many people are surprised to learn that only using one credit card and using it frequently can negatively can give them a low credit score. This applies even if you pay the balance off in full each month.

While paying off you balance in full each month is something you should definitely be doing, banks also calculate your debt risk levels with something called utilization. Utilization refers to how much credit you’re using, and not the debt load you’re carrying.

For example, if you have one credit card with a $1000 limit and you use $200 of it at all times, that’s a 20% rate of utilization. A high utilization score can have a negative impact on your credit score for two reasons: it suggests that you cannot control your spending and it negatively affects your credit limit increases. This is because banks see you as using too much of your available credit to offer you more.

To prevent this, pay your credit card down more frequently, keeping the balance above zero but still quite low. You can also increase your available credit to make your utilization percentage smaller.

 

  1. Not knowing what’s on your credit score

There are many strange things that can pop up on credit reports. This is why it’s important to know what’s on your credit report by checking it at least once a year.

What’s even more important than knowing what’s on your credit score is knowing how to take action when you see something there that shouldn’t be. Reporting inaccurate information can often be done online through reputable services, or you can report the issue directly to the Consumer Financial Protection Bureau by registering the complaint online. Creditors act much quicker to remove erroneous information when the regulator is involved. 

  1. Paying collection items first

We understand, when something goes to collection the constant harassment by collectors can be downright infuriating. This is why many people pay collection items first and skip or neglect active accounts, like skipping a couple credit card payments.

The issue with this is that once something has gone to collections, the damage is done. However, your credit cards and active accounts can still damage your credit if they are neglected.

By ignoring your credit cards to pay your collection items, you may actually end up with worse credit.

Getting by when the chips are down

If you happen to be a in a tough situation and are suffering from a low credit score, you’ll still need a quick way to get money into your hands. Whether this is to cover an unexpected bill from your car breaking down, or making sure your credit cards get their minimum paid when something else goes to collections, the fastest way to do it is with a payday loan.

Payday loans are a relatively small amount of money borrowed at a high rate of interest that is meant to cover you for a short period of time. It’s important to be able to pay back your payday loan in full, otherwise you will suffer the damages of the high interest payments.

Credit Card Processing Mistakes to Avoid in Ecommerce

The life’s blood of ecommerce, credit card payments are the killer app without which online shopping would not exist. Of course, along with the convenience they provide, credit cards bring some pretty significant issues of which digital merchants need to be aware.

Here are five common credit card processing mistakes to avoid in ecommerce.

1. Skimming Over Terms and Conditions

We’ve all become accustomed to simply clicking “Agree” when presented with a Terms and Conditions screen. As 50,000,000 Facebook users recently discovered, that’s probably not the best idea when you’re counting on business to be done in a specific way. Skimming over the terms and conditions can be positively ruinous for your ecommerce store when it comes to credit card processing agreements.  You could be leaving yourself open to all sorts of financially debilitating situations. Read over everything carefully before signing, or have it gone over by someone you trust who has competency in such matters.

2. Agreeing to a Volume Requirement

Many processors insist upon merchants doing a set dollar amount of business with them each month. Meanwhile, if you’re just starting out, you have no idea where your sales volume will land. If you’ve agreed to one of these deals, you could be on the hook for money you didn’t make. If you must sign on to a volume agreement, start out with a low volume processor, then scale up as your sales increase.

3. Overlooking Hidden Fees

Every processor has fees. After all, that’s how they make their profits. Now, with that said, don’t just automatically go with someone who seems to have the lowest fees. There are many ways a lower fee structure can wind up being costlier in the long run. Fees can vary based upon the type of credit card your customer presents. Online transactions can entail higher fees than physical ones in brick and mortar stores. And, those “customer rewards” offered by certain card companies are paid for by charging you higher fees too. Being mindful of the fee structure when you choose a processor is an imperative.

4. Skimping on Fraud Protection

Whether you’re running ebooks online stores, selling furniture on the ‘net or cosmetics, one good run of chargebacks in a given month could put you out of business. Chargebacks can occur when unscrupulous individuals steal credit card numbers and use them to make purchases at your store. When these charges are discovered by the rightful owner of the card and reported to their financial institution, you can be compelled to refund the legitimate cardholder. This puts you at a double loss. You’re out of the money as well as the merchandise the fraudster “purchased”. You want to work with a processor who will do everything possible to minimize fraud—and offer you protection if criminals slip through their defenses.

5. Taking on The Responsibility of PCI Compliance

Payment Card Industry Data Security Standards (PCI DSS) were put in place to make credit card transactions as secure as possible. A necessary part of doing business, they can also be expensive to meet. Further, PCI DSS protocols evolve as new threats emerge and methods to thwart them are developed. Keeping up can be difficult when you’re also trying to run your business. To avoid this, choose a processor who maintains PCI compliance and make sure your site is being hosted by a PCI compliant entity as well.

Affording the proper attention to these five credit card processing mistakes to avoid in ecommerce will save you a lot of headaches. They will also help you keep more of your hard earned money where it belongs—in your bank account.