The role of telematics and real-time motor insurance is developing quickly. David James, The Floow’s Chief Operating Officer, shines the spotlight on the UK’s first app-only telematics insurance.
It’s well-known that age is a key factor in setting premiums for motor insurance policies – with data from the Association of British Insurers (ABI) showing that drivers aged under 26 pay on average hundreds of pounds more for their premiums than older drivers. The fact is motor insurance has been priced this way to factor in the experience of the motorist, with younger drivers seen as less experienced and statistically a higher risk for insurers.
But for some time now, many younger drivers have found that one way to access a discount on their premium is to install a black box in their vehicle to record driving behaviour and provide insurers with access to this data, potentially leading to discounts at time of renewal to reflect their safe driving.
This black box approach has been a huge step in the right direction for younger motorists – doing away with the one-size-fits-all approach to pricing based on age and risk, and reconnecting the driver with their insurer to develop a more constructive relationship rather than a single touch point at renewal.
Beyond the black box
But the telematics market is developing fast, and it’s critical that tech providers keep in step with these users, almost all of whom now use smartphones. So this begged the question as to whether driver behaviour could be tracked via a platform that harnesses a smartphone as a telematics sensor, rather than utilising the traditional black box method of recording driver data.
This question has been answered with the recent launch of DriveXpert, which saw Direct Line Group (DLG) become the first UK insurer to use an app-only proposition to support policy-backed insurance on its Privilege brand.
This is a very significant milestone for the UK insurance telematics market, directly addressing some of the most challenging costs, inefficiencies and dangers faced by road users and encouraging safer driver behaviour.
How does it work?
A huge amount of research and development, robust testing and a swathe of data security protocols went into the creation of an app which works in the background to capture the relevant journey details when a user is in motion in order to deliver scores.
The upshot of all this R&D is that we now see that using a smartphone for data collection is just as accurate as using a black box – a fact that now has the seal of approval of a leading insurer like DLG.
The DriveXpert app records the location of a user’s phone and, when the phone senses movement, it begins to record that journey. If the user was not driving, the app will automatically detect the mode of transport that is being used, e.g train, bike, plane, boat, and this will be shown in the app.
Access to telematics
The technology behind this is pretty clever stuff, but in essence, once a user has registered and downloaded the app to their smartphone, it acts as a mobility sensor evaluating and scoring smooth driving, mobile distraction, road risk, speed and time of day.
DriveXpert collects this journey data and feeds it into the FloowDrive platform, where it is used to calculate scores based on driving behaviour. The driver scores can ultimately result in policy premium discounts and provide feedback to help drivers become better behind the wheel.
And that’s why this is a truly groundbreaking development. By making the black box function available on a smartphone, the app exponentially increases the potential for drivers to access telematics, since smartphones are more cost effective and ubiquitous.
This widens the potential reach of telematics technology within motor insurance, and since DriveXpert is also primarily targeted at drivers under the age of 26, it’s this ease of access that will hopefully lead more young drivers towards the solutions that provide them with the best insurance cover. Additionally, usage of DriveXpert, comes with the offer of an upfront discount to the driver, with the potential for them to obtain a reduced premium at renewal time, dependent on their scores.
Driver distraction under the spotlight
The evolution to the smartphone from the black box has another pioneering benefit in that it allows the insurer to capture mobile distraction data. Findings from major studies indicate that using a mobile phone whilst driving increases a driver’s crash risk 4x (WHO) while drivers who text while driving are 23x more likely to be involved in a ‘safety-critical event’ (US DoT)
The fact is that driver distraction is a major factor in a driver’s likelihood to crash – and young people are more likely to be distracted by their mobile phones behind the wheel. But by using the smartphone as the sensor, it also enables the measurement of how much a driver physically interacts with their phone, as well as the phone’s call state throughout a journey.
This data is used to inform a mobile distraction score – and of all The Floow’s scores, this is the most predictive of a driver’s propensity to claim, and it provides the same results across clients and continents. This is because it assesses a driver’s risk based on how they use their phone behind the wheel, not just the number of occasions where a driver uses their phone.
The upshot to using the smartphone as the black box, is that it acts as a deterrent to drivers tempted to use their phones while driving, encouraging and rewarding safer driving behaviours as a result.
Better insurance for everyone
While the spotlight with app-based driver telematics is on the benefits available for younger drivers, this technology is available to everyone so all age groups can benefit from the discounts, rewards and driving tips on offer with smartphone-based telematics.
This has been the norm in the US for some time, and it will start to filter through to the UK and European markets over the next few years, as smartphone-based telematics gathers momentum – across age groups – due to the game-changing simplicity and cost-effectiveness of this solution.
The launch of DriveXpert is testament to the fact that the motor insurance market is rapidly evolving, with interest in usage-based insurance under the spotlight currently, given the impacts of the lockdown and reduced car usage.
The data-driven evolution of telematics is allowing insurers and policyholders to get the best out of their policies – but better serving drivers into the future means developing more dynamic and customer-centric insurance policies.
There will be further exciting developments in the app-based telematics market for motor insurance that may well ultimately change this class of business in the industry for ever, so watch this space!