Mobile devices are now on the cusp of disrupting what might arguably be their most impressive feat yet — the notoriously staid, and unfailingly constant insurance industry — right from the palm of our hands.
Mobile devices also are at the center of the distraction that is wreaking havoc on the transportation system, as well as our systems and ways of thinking. Yet, these devices can help solve this very issue, serving as the link to understanding driver behavior through mobility data — not as a model but in real life, in real time.
To move at the speed of the consumer, insurers must move beyond traditional data used for years and tap into the power of mobility data to create more relevant experiences, as well as a deeper, more accurate understanding of risk.
Mobility data vs. device data
Telematics data from on-board diagnostics (OBDs) proved the concept of usage-based insurance, but cost held it back from mass adoption. Now, mobile data can deliver in accuracy and insights.
OBD data does a good job verifying mileage as well as speeding, hard braking, aggressive turns and time of day that a vehicle is driven, and all of this information is useful. But what it can’t do is tell you who is driving the car during different trips or if the driver is distracted, whether it be sending texts at 65 mph or checking a navigation app at a red light.
Mobile data captures meaningful driving behavior for individual drivers, including distracted driving phone handling, which is a more predictive metric than verified mileage or credit history. Telematics models have shown us that not all distracted driving behaviors are equally risky, naturally resulting in varying levels of loss for insurers.
For example, mobile data distinguishes between phone usage at a red light vs texting while driving. It can also apply more contextual data such as real-time traffic. All these actions will help to define a more accurate risk profile
Many insurers are scrambling to accumulate the driver data needed in order to build more accurate pricing models that reflect distracted driving behaviors. And the fact of the matter is, most insurers simply don’t have the data — or the data science and technological means — to accrue mobility data down to the distracted driver level or at a scale that would create accurate models.
If you’re serious about pricing risk more accurately today, as well as into the future, consider a third-party data partner that has already build a platform, partnerships and data model (a.k.a. driver score) that is based upon real claims data and accounts for both distracted driving and loss.
Adoption vs. extinction
The automotive insurance industry is ripe for an overhaul to its business model. Not only can customers be targeted by companies with more advanced pricing, but by the change of car ownership moving towards shared mobility use cases. By strategically leveraging the right data, insurers can go on the offensive, instead of becoming victims of the evolving transportation ecosystem. Insurers must become increasingly responsive to the changing needs of their customers by harnessing the power of mobile data. Then create insurance products and solutions that take the changing landscape into account, while empowering customers to experience a whole new world of options.
Overall, the insurance industry must evolve to remain relevant and profitable as the nature of mobility changes at a breakneck pace. Understanding how to mobilize mobility data is at the center of the industry’s survival, and we must act now.
Gary Hallgren is the president of Arity, a technology company focused on making transportation smarter, safer and more useful by transforming data into actionable insights to help partners better predict risk. Hallgren has more than 20 years of industry experience in connected cars, telematics and usage-based insurance.
These opinions are the author’s own.