Corporate Insight recently attended the 2018 Auto Insurance Report National Conference at the beautiful Ritz-Carlton in Laguna Niguel, California. Every year, host Brian Sullivan of Risk Information invites industry leaders and key decision makers to offer their takes on the latest industry trends and auto-related products and services.
This year, the traditionally diverse conference was dominated by discussions surrounding telematics and usage-based insurance (UBI). With millions of customers already registered with UBI policies and more signing up every day, this technology is already impacting the auto industry in a significant way. Corporate Insight’s industry research service, P&C Insurance Monitor, has already undertaken multiple telematics user experience studies, with more scheduled in our research calendar. Most recently, we analyzed Allstate’s Drivewise program in our February 2018 monthly report in addition to previously reports on Progressive’s Snapshot and State Farm’s Drive Safe & Save programs.
Here are three key takeaways from the telematics presentations at the conference:
- Telematics is reaching a critical mass: Several major insurers, notably Progressive and Allstate, are committed to leveraging the technology. Sullivan noted that while he has been bullish on telematics and UBI for several years, rollout and adoption have been slow. Now, however, he sees the technology truly gathering momentum. In addition to firm-led efforts, the industry has also come to a point where third parties are bringing workable turnkey programs and models to insurers who are unable or unwilling to build their own.
- A central location to normalize data is incredibly important: In order for telematics to realize continued success, insurers must commit to sharing data, which will allow models to get better. Further, telematics data must be put in context with traditional underwriting information and claims data. Granular data sets will eliminate reliance on oversimplified counts of “hard brakes” or “late-night driving” and allow insurers to truly understand their customer sets. This is a phenomenon Corporate Insight is also tracking in the life insurance space, where MassMutual subsidiary LifeScore Labs recently announced that it will sell its LifeScore360 underwriting algorithm.
- Telematics data is highly predictive: Results from a recent Verisk study reveal the riskiest drivers are six times more likely than the safest drivers to file claims. Even average drivers are two to three times more likely to file claims than the safest drivers. As clients who file fewer claims drive underwriting profit, insurers can leverage the data provided by telematics to identify and engage their safest (and therefore most profitable) drivers to make sure they retain them.