Digital insurers continue to enhance the insurance value chain with more intelligent and automated decisions. 2018 saw many able to improve their combined ratio through analytics-driven process optimization, operational improvement, and predictive capabilities. For 2019, we expect this trend to further accelerate as digital transformation continues to gain momentum and priority, resulting in more focused strategies with access to more resources and budget.
Outlook
In a recent Gartner survey conducted with more than 150 insurance CIOs, “digital transformation has emerged as the most common top strategic business priority among global insurance CIOs”. This is up from second place reported in the same survey conducted a year ago. For the last few years, many stakeholders have witnessed this trend unfolding, but the excitement and momentum has been accelerating during the last 12 months. According to the Gartner Survey, “data and analytics continues to be the most commonly mentioned game-changing technology among insurance CIOs; however, artificial intelligence (AI) has moved to second on the list for 2018 and 2019. Focusing on how to build data mastery throughout the value chain is a critical strategic priority for most insurance CIOs.” The report further states, “During the last 12 months, Gartner has seen great interest in the use cases and application of AI for many tasks, including chatbots for customer service, underwriting assistance platforms, and AI for no-touch claims processing.”
2019 will be a year of innovation across the insurance sector, with many companies accelerating their digital maturity despite cultural challenges or technical challenges associated with legacy systems. With digital maturity will come the better use of data and more advanced analytics that provide better insights for decision making. We will also see the pockets of innovation found throughout insurance companies start to converge, such as scoring algorithms for usage-based insurance (UBI) extending beyond the auto insurance vertical and product line. Ultimately, increased digital maturity and innovation convergence will help insurers meet their underlining objectives for the year.
Enablement
At Octo, we continue to support insurers through their digital transformation. No matter what stage the insurer is in their digital maturity, our insurance-focused breadth of services significantly reduce the time-to-market and increase return on investment (ROI).
Insurance-specific: Enable the application of IoT data to critical insurance-specific uses, including risk management, claims management, and customer management.
Fully modular: Every aspect of the platform can be leveraged individually or as part of a comprehensive solution, allowing insurers to leverage in-house solution or platform capabilities as needed.
Extensible: Platform development tools, extensive APIs, and our partner ecosystem allow insurers to extend the value of the platform, explore new use cases, and connect new lines of business.
Device agnostic: Respond to customer needs and market trends through the platform’s open architecture and sensor-agnostic plug-and-play device model, allowing us to ingest data from any source.
Octo’s insurance IoT platform, uniquely links the characteristics of a horizontal IoT framework with pre-built vertical use cases for insurance, helping insurance companies accelerate their digital evolution, drive revenue growth, and minimize claims. Octo’s insurance IoT platform has been cited in Gartner’s paper “How to Achieve Digital Business Excellence by Mastering the Pervasiveness of Integration” published in December 2018 (ID G00373656).
Octo’s insurance IoT platform is designed to be truly device agnostic, supporting Octo devices, third-party and mobile devices, and multiple data sources that continue to develop with our enlarging partner ecosystem. Complexities and compatibility are fully maintained by the platform through sensor normalization, before value propositions such as data management, advanced analytics, CRM & Digital (including smartphone as UX) service multiple vertical business lines (see Figure 1).
Figure 1 – Octo’s Insurance IoT Platform Overview
About Octo Telematics
Octo is the number one global provider of telematics and data analytics solutions for the insurance industry. Founded in 2002, Octo is one of the pioneers of the insurance telematics industry. Today, Octo is the largest and most experienced insurance telematics company in the world, transforming auto insurance through behavioral, contextual and driving analytics for more than 100 insurance partners. Octo has more than 5.6 million connected users and the largest global database of telematics data, with over 228 billion miles of driving data collected and 456,000 crashes and insurance events analyzed.
Octo is headquartered in Rome, with offices in Boston, London, Stuttgart, Madrid, and Sao Paulo. To find your local office, please visit www.octotelematics.com.
At the end of 2018, Octo partnered with Wells Media to conduct its second state of insurance telematics survey. We surveyed 144 senior managers and executives of US property and casualty insurance carriers to find insights into how they are using telematics, how the market is evolving, and the challenges and benefits an insurer can expect when implementing telematics.
Perhaps the most striking shift between 2016 and 2018 is how insurance carriers are collecting their telematics data. In 2018, smartphones surpassed OBD-2 dongles as the primary sensor driving telematics in the US. While only 17% of programs were smartphone-driven in 2016, 36% of insurers used smartphones as a sensor in 2018. The growth in smartphones has not driven significant reductions in dongle-based programs, but instead comes from new programs.
OEM-integrated programs have also grown, tripling from use in 4% of insurance telematics programs in 2016 to 15% in 2018 (Figure 7).
Figure 7
In 2018, 8% of respondent organizations used windshield tags as a device to collect telematics data (Figure 6). While we did not collect survey data on the use of windshield tags in 2016, we are confident that the use of tags has increased according to other reputable market studies.
Figure 6
Just over half (57%) of insurance carriers are currently using only one device to collect telematics data. For the carriers using a mix of devices, the most common combination is OBD-2 and smartphone representing 8% of carriers, down from 26% in 2016. This divestment of a multi-device portfolio shows the increased strength of the smartphone-only value proposition.
Benefits and challenges of smartphone-only telematics
Smartphone-based telematics has three primary benefits over traditional, device-based telematics:
Reduced costs: Using smartphones as telematics sensors can significantly reduce the cost of launching a telematics program by eliminating device, telecommunication, shipping, receiving, refurbishing, and warehousing costs. While there are still costs associated with building and maintaining a smartphone app, the cost per user decreases significantly more when scaling mobile telematics than device-based telematics.
Ease of adoption: Each step between the binding of a policy and activation of the telematics sensor (whether smartphone or device) reduces the likelihood that the insurer will collect the data they need. With the smartphone-as-a-sensor model, activation rates increase as a telematics app can be delivered almost immediately via email, chat window, or web page.
Improved engagement: Whether using smartphones as a sensor or a smartphone / device hybrid solution, pairing telematics with a smartphone enables customer engagement tactics that drive retention and reduce risk.
There are also challenges unique to smartphone-based telematics, including:
Data consistency: Every make and model of smartphone uses a unique combination of sensors (accelerometer, gyroscope, GPS) to collect data. Differences in operating systems, versions, and configurations also lead to data quality issues. Additionally, lacking a device, insurers and TSPs may be challenged to identify only trips associated with the insured vehicle, potentially mischaracterizing some risk.
Functionality loss: Smartphone-only telematics precludes some functionality that other programs offer. One notable example is the collection and use of vehicle data from the CAN bus. Smartphone-based telematics also poses challenges in insurers’ ability to detect and reconstruct accidents based on telematics data due to data consistency, accuracy, and frequency challenges.
Impact on telematics adoption
With the expansion of smartphone-based telematics and the increase in market experience with the implementation of telematics, the percentage of insurers concerned with the cost of telematics implementation has dropped significantly from 2016 (29%) to 2018 (16%). Smaller carriers and carriers who were earlier in their implementation of telematics are more concerned with implementation costs than Tier 1 carriers.
Similarly, fewer insurers highlighted challenges associated with proving the ROI of telematics in 2018 (16%) than in 2016 (36%). In part, this is likely due to the rise in smartphone telematics and the associated reduction in cost and improved adoption rates.
Gartner forecasts the number of connected things will exceed 20.4 billion across consumer and business applications by 2020. According to Cisco, IoT devices will generate over 5 quintillion bytes of data every day about human behaviors and health, home safety and security, vehicle usage, physical asset utilization, and more. The explosive growth of IoT devices, and the vast benefit afforded by IoT to insurance necessitates a connected insurance strategy. Almost every one of these connections could be attached to an insurance policy.
The claims management function has relied on subjective policyholder reporting and after-the-fact analysis, regardless of business line. IoT allows insurers to detect loss events in near real-time through dedicated event detection sensors (e.g. connected smoke detectors and telematics-based crash detection) or through behavior monitoring sensors and advanced analytics (e.g. heart attack detection through a wearable sensor). This use of IoT sensors for claims management, connected to an insurance IoT platform, enables insurers to mitigate losses, combat fraud, decrease claim settlement time, and improve policyholder satisfaction.
Auto insurance
The use of auto insurance telematics data beyond risk assessment is a new concept in the US market. In Europe, insurers have been using telematics data to improve claims outcomes for decades. Insurers in the US have recently started leveraging their investment in telematics technologies to improve claims. Claims outcomes have possibly the greatest impact on retention and referrals over any other factor. A report from J.D. Power shows that “satisfaction with the claims experience impacts customer retention and referrals.” 83% of those who had the best claims experience reported they “definitely will” renew their policies. 84% would recommend their insurer. For those that had the worst claims experience, only 10% would renew with or recommend their insurer.
From a purely financial perspective, the impact of telematics on claims is well-documented:
10% reduction in total claims costs*
60% or greater reduction in time to settle claims*
Octo’s partners have reported double-digit improvements in combined ratio with mature programs leveraging telematics to improve claims. Similarly, insurers such as Zurich, Ageas, and Co-operative insurance have reported using telematics data to reduce claims costs by 30-60%.
Homeowner’s insurance
Water damage avoidance
Over one-third of homeowners’ insurance claims are related to water damage. Non-weather-related water damage (such as a burst pipe), makes up almost 20% of total claims. Estimates put the average water-damage claim at almost $9000.
Thanks to water flow sensors, this type of damage is now easily monitored and prevented. Smart water flow monitors can detect leaks in a home’s plumbing, alert the homeowner, and in many cases shut off water flow to affected pipes. Non-emergency alerts, such as a faucet being left on can also be triggered by some sensors. This type of targeted feedback can be critical for behavior-based risk reduction. IoT moisture sensors can also be valuable for detecting and alerting homeowners to both weather-related and non-weather-related flooding. One study by the ACE Group predicts that more than 90% of water damage claims could be avoided through the use of automated leak detection and mitigation systems.
Neos is an innovative connected home insurance company in the UK that offers IoT sensors as part of its insurance offering. They are successfully using leak sensors for water-related claims mitigation, along with other IoT sensors to combat all major home-related risks.
Fire risk mitigation
Fire-related claims are the most expensive homeowners’ insurance claims, responsible for nearly one-quarter of total claims costs. Three of every five home fire-related deaths resulted from fires in homes with no smoke alarms (38%) or no working smoke alarms (21%). Dead batteries caused one-quarter of smoke alarm failures.
Smoke detectors are required by most, if not all, insurance carriers. Smart smoke and carbon monoxide detectors have been developed to address the two greatest challenges with traditional alarms: off-premises notification and alarm status verification. Through a mobile app, smart smoke detectors can notify homeowners of an event no matter where they are. This is critical for claim mitigation as the homeowner (or their insurer) can notify emergency services immediately upon notification and potentially reduce the severity of property loss. If the insurer is
integrated directly with the sensor or service provider, they can also get insight into the status of fire alarms on an insureds’ property. For example, Liberty Mutual’s smart home insurance product offers a discount on home, condo, or renters’ insurance and a free Nest Protect smart fire alarm if insureds share their Nest data with the insurer. For those who opt-in, Nest shares only the devices battery level, status, and Wi-Fi connection strength with the insurer for verification purposes.
More than half of U.S. households with broadband internet find the idea of an IoT device that alerts them to smoke and fire highly appealing. BI Intelligence estimates a home equipped with a connected smoke detector that automatically alerts the fire department could potentially cut an insurance payout by an average of $35,000 USD. Similarly, most consumers would be willing to share smoke or carbon monoxide detector information with an insurance carrier for the right incentives.
Roost Telematics has partnered with leading North American insurers to successfully launch home telematics programs focused on fire and water damage claims mitigation. Roost has reported that their sensors and automated reporting lead to 5-15% reduction in claims for their insurance partners.
Burglary avoidance and mitigation
According to Safeguard the World, the chances of a home burglary rise by 300% when a home has no security system. The average cost of a property-theft related claim is around $2250. Most insurers already incentivize the installation of a security system through insurance discounts. Like fire alarms, insurers have little insight into security-related behaviors except for one-time confirmation of enrollment in a security program.
IoT-enabled devices allow for the remote monitoring of the home and remote activation of home alarm systems, locks, indoor/outdoor lighting, smoke alarms, and even doorbells. In the event of a theft, fire, or flood, in-home video monitoring can be used as a catalog of property damaged or destroyed to help accelerate the claims process and combat fraud.
One example of a connected home insurance program is American Family’s partnership with Ring. American Family offers a $30 discount on Ring’s video doorbell products. If the homeowner installs the doorbell, they become eligible for AFI’s Proactive Home Discount. In the event of a burglary, Ring will reimburse the homeowner’s policy premium.
Life and health insurance
Smart devices provide a unique ability to both detect a health event before it happens through leading indicators and to detect and mitigate the severity of an event. For example, a smart wearable device can monitor blood glucose measurements, notify the wearer if glucose levels drop, and provide doctors with trend data to help them understand how well their patient is managing their diabetes. Insurers can tie this type of monitoring to policyholder incentives and provide real-time feedback to improve chronic disease management outcomes. A similar smart wearable device that detects heart rate and temperature could be used to identify a heart attack, alert the insurer, and provide a mechanism for providing emergency services to the policyholder. Wearable devices, with the right sensing capabilities, have been proposed to detect cancer, stress, diabetic emergencies, hypertension, asthma attacks, and many other chronic disease-related emergencies.
Across health-monitoring smart devices, insurers have the ability through real-time health monitoring to avoid claims, reduce the severity of claims, and improve policyholder satisfaction.
IoT is well positioned to help combat fraud in health insurance. Data on location and health statistics can give insights into what happened before, leading up to, and after an event causing a medical claim. Insurers can use this data to detect pain levels and combat drug-seeking behaviors, detect behaviors inconsistent with disability claims, and to shift liability from a health insurance claim to (or from) a workers’ compensation claim.
Octo is exhibiting at DigIn – the innovative, industry-leading event built to showcase the best aspects of the digital future of insurance. DigIn will feature keynotes from the industry’s disruptors including Apple Co-founder Steve Wozniak. Stop by booth #210 and speak with one of Octo’s on-site experts if you’re interested in elevating your connected products to an enterprise-level strategic differentiator.
For auto insurance carriers, claims account for over 70% of net premiums written. Any reductions that insurers can make to claims costs are critical to improving their combined ratio. Telematics is uniquely suited to address all the major contributors to claims expenses and help insurers achieve sustainable cost reductions. This infographic explores the growing loss ratio challenge auto insurers face today, identifies the specific ways telematics reduces claims costs, and provides an example of the impact of telematics on an insurer’s combined ratio.
Octo is excited to announce that together with our partner AITE we will be presenting the interactive webinar: The Future of Dynamic Risk Analysis and Rating Is Here: Insurers Must Be Ready to Move or Be Left Behind When: Wednesday, May 8th Time: 10am ET, 3pm BST, 4pm CET Speakers:
Geoff Werner VP DriveAbility and Consulting Americas’ Country Manager Octo Telematics
Greg Donaldson Senior Analyst, Insurance Aite Group
Historically, insurance companies have used static data to evaluate overall risk exposure and develop rates. Many of these traditional underwriting and pricing factors are proxies for how, how much, where, and when a vehicle is operated. But dynamic data sources are now available that directly measure the true risk in real time and improve risk segmentation. Companies that effectively incorporate emerging internet-of-things data with advanced analytics will have a competitive advantage, and those who do not will be subject to adverse selection.
Traditionally, insurers have used proxy data to identify the risk of loss for an asset. The internet of things (IoT) gives insurers access to real-time, individual, and observable data on an asset’s (or person’s) risk of loss. This data is directly actionable for risk pricing and mitigation. By identifying actions or behavior that are causative of risk and leveraging IoT sensors that monitor these behaviors, insurers can create algorithms that tie observed behavior directly to pricing models. Insurers can similarly leverage this data for risk mitigation by providing timely and specific feedback to insureds rewarding safe behavior and warning of risky behavior.
In addition to risk assessment and pricing, IoT can drive improvements through:
Improved customer segmentation: IoT data gives new insights into customer behaviors that can be leveraged for upselling and cross selling opportunities across business lines. IoT data allows insurers to ask – and answer – new and more complex questions about their customers and prospects than ever before.
Personalized insurance offerings: Deeper understanding of policyholder behavior and individualized risk data allow insurers to personalize insurance offers to their customers’ needs.
Behavior-based feedback and engagement: With IoT-based monitoring individual behaviors can be detected and acted upon in near real time. This enables insurers to provide feedback in the most critical moments to either positively reinforce safe behaviors or educate about risky behaviors. Additionally, if a loss event is detected, insurers can provide immediate support to mitigate losses, protect policyholder safety, and reduce the time it takes to settle.
Workers’ compensation risk management
Worksite risk mitigation
Safety videos, training programs, and on-site safety services today focus on mitigation of common risks in common situations. Trainings are often sporadic and general or after-the-fact and specific. It is difficult to monitor the results of trainings and tie incentives to individual behavior.
Wearable sensors provide employers with the opportunity to detect risky worksite behavior (such as poor lifting behavior), provide on-the-spot feedback to avoid that behavior, and enable employers to monitor improvements in that behavior over time. Crane Logistics and Caterpillar, for example, have leveraged wearables to reduce the number of high-risk lifts performed by workers in a pilot program by 80%. Other examples include the use of smart helmets to detect and respond to heat stroke and chemical exposure tracking via sensors. With improvements in safety management and risk mitigation, employers can see major decreases in claims.
As in other lines of business, IoT allows insurers to get deep insights into individual behaviors, identify risky behaviors, and underwrite that risk accordingly. Employers are incentivized to reduce risky behaviors, with the benefits of risk reduction accruing to both the employer and the insurer. IoT-driven behavior change can reduce workers’ compensation costs by more than 20%.
Lifestyle risk mitigation
The growth of workplace wellness programs globally is indicative of the business value of improving employee health. Improving employee health can be on the most effective way employers can reduce health-related employee costs in the long-run. Insurers often participate in employee wellness improvement programs by incentivizing healthy behaviors through gym cost reimbursements or healthy living discounts.
Wearables provide insurers and employers with the insight they need to monitor health and wellness program adherence. Insurers can tie gym reimbursements to workout frequency and severity. Employers can monitor physical rehabilitation via IoT sensors to ensure injured workers are completing the programs their doctors prescribed. Smartphone-based IoT programs can similarly monitor drug rehabilitation program participation and help mitigate recidivism.
By leveraging IoT, employers can also take a more proactive approach to health and safety. Through IoT data, employers can identify potential risk scenarios such as a driver who is too tired to perform their duties. Fatigued workers are more likely to be injured on the job with people who sleep less than five hours per day, for example, have 3.5 times higher injury incidence rates than those who sleep between seven and eight hours per day. A study from Liberty Mutual ranked overexertion as the leading cause of workplace injuries, directly costing companies $13.8 billion each year. Wearable IoT devices can help employers monitor health indicators such as lack of sleep, workplace stress, and overexertion and proactively address these risky behaviors.
Risk mitigation in life and health insurance
The costs of care for hypertension, diabetes, asthma and other chronic conditions amount to 86% of the United States’ $3 trillion annual healthcare spend. As employers bear the majority of the burden of this cost, anything that can help employers prevent chronic conditions is critical to their bottom line. IoT devices can be used to detect health characteristics such as blood glucose levels, temperature, and heart rate and identify healthy behaviors such as sleep, exercise, and stress. This data can be analyzed to provide automated feedback that encourages healthy habits.
John Hancock recently announced that it would only sell interactive life insurance policies that incentivize health behaviors through the optional use of a wearable device for policyholders of their life insurance Vitality product. The program is designed to incentivize policyholders to stay fit via rewards and discounts. The announcement came after a successful pilot in which participants:
Lived 13-21 years longer than the rest of the insured population
Generated 30 percent lower hospitalization costs than the rest of the insured population
Took nearly twice as many steps as the average American
Logged more than three million healthy activities including walking, swimming, and biking
Engaged with the program approximately 576 times per year – compared to customers with traditional insurance, who engage with their life insurance company one or two times per year on average
UnitedHealthcare’s Motion health insurance program, launched in 2017, is similarly focused on incentivizing healthy behaviors. Participants’ fitness habits are monitored via an IoT sensor and incentives are deposited in HRA / HSA accounts based on meeting frequency, intensity, and tenacity of fitness goals. Participants can earn up to $1100 per year. Motion’s results to date have been similarly impressive:
12,000 steps daily
60% of participants sustain engagement over 6 months
45-65% of those eligible to participate in Motion registered for the program
Compliance is another area where IoT could have a potentially significant impact on health and life insurance outcomes. Innovations such as smart pills contain ingestible sensors that can report when the pill has actually been taken by the patient. Patients who comply with their drug regimen may be at lower risk for adverse healthcare outcomes and those who don’t may achieve better outcomes through automated follow up and feedback to improve adherence.
Risk mitigation for homeowner’s insurance
Water damage avoidance
Over one-third of homeowners’ insurance claims are related to water damage. Non-weather-related water damage (such as a burst pipe), makes up almost 20% of total claims. Estimates put the average water-damage claim at almost $9000.
Thanks to water flow sensors, this type of damage is now easily monitored and prevented. Smart water flow monitors can detect leaks in a home’s plumbing, alert the homeowner, and in many cases shut off water flow to affected pipes. Non-emergency alerts, such as a faucet being left on can also be triggered by some sensors. This type of targeted feedback can be critical for behavior-based risk reduction. IoT moisture sensors can also be valuable for detecting and alerting homeowners to both weather-related and non-weather-related flooding. One study by the ACE Group predicts that more than 90% of water damage claims could be avoided through the use of automated leak detection and mitigation systems.
Neos is an innovative connected home insurance company in the UK that offers IoT sensors as part of its insurance offering. They are successfully using leak sensors for water-related claims mitigation, along with other IoT sensors to combat all major home-related risks.
Fire risk mitigation
Fire-related claims are the most expensive homeowners’ insurance claims, responsible for nearly one quarter of total claims costs. Three of every five home fire-related deaths resulted from fires in homes with no smoke alarms (38%) or no working smoke alarms (21%). Dead batteries caused one-quarter of smoke alarm failures.
Smoke detectors are required by most, if not all, insurance carriers. Smart smoke and carbon monoxide detectors have been developed to address the two greatest challenges with traditional alarms: off-premises notification and alarm status verification. Through a mobile app, smart smoke detectors can notify homeowners of an event no matter where they are. This is critical for claim mitigation as the homeowner (or their insurer) can notify emergency services immediately upon notification and potentially reduce the severity of property loss. If the insurer is
integrated directly with the sensor or service provider, they can also get insight into the status of fire alarms on an insureds’ property. For example, Liberty Mutual’s smart home insurance product offers a discount on home, condo, or renters’ insurance and a free Nest Protect smart fire alarm if insureds share their Nest data with the insurer. For those who opt in, Nest shares only the devices battery level, status, and Wi-Fi connection strength with the insurer for verification purposes.
More than half of U.S. households with broadband internet find the idea of an IoT device that alerts them to smoke and fire highly appealing. BI Intelligence estimates a home equipped with a connected smoke detector that automatically alerts the fire department could potentially cut an insurance payout by an average of $35,000 USD. Similarly, most consumers would be willing to share smoke or carbon monoxide detector information with an insurance carrier for the right incentives.
Roost Telematics has partnered with leading North American insurers to successfully launch home telematics programs focused on fire and water damage claims mitigation. Roost has reported that their sensors and automated reporting lead to 5-15% reduction in claims for their insurance partners.
Burglary avoidance and mitigation
According to Safeguard the World, the chances of a home burglary rise by 300% when a home has no security system. The average cost of a property-theft related claim is around $2250. Most insurers already incentivize the installation of a security system through insurance discounts. Like fire alarms, insurers have little insight into security-related behaviors except one-time confirmation of enrollment in a security program.
IoT-enabled devices allow for the remote monitoring of the home and remote activation of home alarm systems, locks, indoor/outdoor lighting, smoke alarms, and even doorbells. In the event of a theft, fire, or flood, in-home video monitoring can be used as a catalog of property damaged or destroyed to help accelerate the claims process and combat fraud.
One example of a connected home insurance program is American Family’s partnership with Ring. American Family offers a $30 discount on Ring’s video doorbell products. If the homeowner installs the doorbell, they become eligible for AFI’s Proactive Home Discount. In the event of a burglary, Ring will reimburse the homeowner’s policy premium.
Auto insurance risk management
Improving risk assessment
Insurance telematics provides a step-change improvement in risk assessment over traditional factors that are largely proxies for how, how much, when, and where vehicles are operated. Insurers can combine granular telematics data with contextual, policy, and claims data to develop a score which is highly predictive of risk. Done correctly, insurers can create a score that provides double-digit lift, optimizes the lift above and beyond traditional factors, and identifies factors that cause vehicle accidents.
One 2018 study, when comparing a classical (non-telematics) risk model against telematics-based and hybrid (telematics and traditional factors) models by level of predictiveness showed the classic model ranked least predictive of all models. Progressive Insurance, the US leader in UBI has released findings stating that driving behavior predicts accidents more than two times over traditional risk factors. Milliman has similarly announced a telematics-based risk score that is up to six times more powerful than using traditional factors alone. Octo’s risk score, the DriveAbility Score has been proven to provide 10-12 times lift to score predictiveness.
Risk mitigation
A review of relevant studies on traffic accidents by Stanford Law School suggests that greater than 90% of all vehicle accidents are caused by human errors and deficiencies. Yet most drivers rate themselves as safer than average. Claims mitigation – critical for driving down an insurers’ combined ratio – requires timely and specific education and training to improve driver safety. Vehicle telematics gives unprecedented insight into driver behaviors and habits, allowing insurers to detect risky habits in near-real-time and provide feedback and education on the specific behaviors exhibited by the policyholder. In one study by the Insurance Research Council, 56% of participants said they had made changes in how they drive after installing a telematics device. Another study found that safe driving increased by as much as 30 percent with the use of a telematics app.
Telematics risk mitigation mechanisms
Short- and long-term behavioral feedback on policyholder behavior: Immediate alerts, daily reports, and driver scoring provide feedback to telematics users, allowing drivers to understand how their driving habits impact safety, and respond accordingly. Immediate feedback helps drivers change their behavior, while trend reports and driver scoring help reinforce behavior change and improve habits over the long-term.
Incentivizing safe driving: Insurance discounts offered for safe driving incentivize improved behavior, helping to reinforce gains made in safety. Gamification flips the focus of driver improvement from reactive feedback to proactive. By incentivizing drivers toward safer behavior – whether the incentive is a coupon, reward, or digital badge – telematics can help people drive safer immediately, without the need to wait for a critique of poor driving.
Reducing distracted driving: According to AT&T, 70 percent of drivers use their smartphones while driving. 64 percent of all road accidents in the United States involve cell phone use. Telematics-driven mobile apps can identify when someone is driving and restrict inbound texts, calls, or other cellphone behavior to reduce distracted driving. Telematics devices can also detect the symptoms of distracted driving, highlight these events to the driver, and provide awareness of the impact of this behavior.
Accident reduction efforts need to start with improving driver safety. Telematics-driven programs have been shown to improve driver safety which is critical to reducing claim frequency.
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UserMatchHistory - *.linkedin.com
Used for LinkedIn Ads ID synchronization. (duration: 30 days)
AnalyticsSyncHistory - *.linkedin.com
Used to store information about the time when a synchronization with the lms_analytics cookie took place for users in the designated countries. (duration: 30 days)
Vimeo
vuid - *.vimeo.com
This cookie is used by Vimeo to collect tracking information. It sets a unique ID to embed videos in your website. (duration: 2 years)
