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Friday, 27 July 2018 21:39

10 Ways Driving Analytics Are Affecting Insurance

Written by Rob MacKethan, Property Casualty 360
Driving analytics are primed to change the way vehicles and drivers are insured, and possibly the way people drive. Driving analytics are primed to change the way vehicles and drivers are insured, and possibly the way people drive. Photo: Shutterstock

Index

You may have noticed a lot of buzz about driving analytics lately, and for good reason.

Driving analytics are primed to change the way vehicles and drivers are insured, and even conceivably change the way individuals drive, for the better.

 

I’ve put together a 10-point primer to help you better understand this technology and its impact on the industry.

 

What is driving analytics? Also referred to as telematics, driving analytics tracks driver data like distance driven and location. By using this technology, a fleet owner could know where all her trucks are at any time, for example, or an insurer could know how safely his insureds are driving.

 

Driving analytics has become driver analytics. In the past, driving analytics has been a physical dongle, called On Board Diagnostics (or OBD), which plugged into a car or truck. It collected data like the number and location of miles driven and speedometer readings. Today, driving analytics has turned toward driver. New phone-based systems can also measure risky behaviors such as distracted driving and follow a driver between multiple cars. What’s more, phone-based analytics capture more types of data and are more accurate than old school dongles.

 

Better driver data means better risk measurement. Ninety percent of all collisions are due to human error, so measuring the human instead of the car makes sense. Leading actuarial firm Milliman found driver behavior is up to six times more accurate at predicting collisions than the insurance industry’s standard methods. In addition, we know that factors like phone use while driving contribute to about 26 percent of collisions and that the amount of distracted driving on the roads is about 100 times worse than we thought. That’s a lot of risk to measure.


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