Can ADAS feature data help insurers understand risk better? Carla McDonald, senior manager, motor insurance, U.K. and Ireland, LexisNexis Risk Solutions takes a look.
The insurance market’s hunger for Advanced Driver Assistance Systems (ADAS) data to use in motor insurance pricing is for good reason. We already know that over 70% of new cars in the U.K. have Autonomous Emergency Braking (AEB) as standard and more than 83% have a self-activating system but what about the U.K. car parc as a whole? Not everyone is fortunate enough to drive a new car. Based on our analysis of over 2.7million vehicles across Europe, the U.K. leads its neighbours in Spain and Italy with eight safety features fitted on average per vehicle. In Spain, the average is six per vehicle while in Italy the average car has four safety features.
Eight safety features on average for every car on the U.K.’s road network is a figure that the insurance market may not have expected. ADAS is not only becoming commonplace it is developing at a rapid pace. Globally, between 2015 and 2020, the Advanced Driver Assistance Systems (ADAS) market doubled in size and is expected to reach nearly 32 billion U.S. dollars by 2023.
ADAS features are designed to help avoid or reduce the seriousness of collisions. With these features becoming more common, the nature of motor insurance claims may change and this could have a material impact on the bottom line for insurance providers.
They will need to know exactly how these advances impact claims and, in turn, could influence pricing. But that insight can only be obtained if you know how a specific car is equipped, at the point of quote. This has been a major hurdle for insurance providers as each ADAS system can have a different name, functionality or calibration, making it hard to use in underwriting.
To start to solve this problem, a common classification of ADAS has been created from millions of lines of car manufacturer’s data, so that the features of a car and their relative performance can be understood and used by insurance providers. Crucially, this is at a Vehicle Identification Number (VIN) level rather than trim level, as some of these features are optional extras.
Insurance providers don’t just need to understand if ADAS is present on a specific vehicle, they need to know how each feature behaves, how it performs and how these features work together or in isolation to help reduce insurance claims frequency.
This led to the creation of ‘Core Features groups’ of ADAS features. These are features that when fitted to a vehicle are found to deliver a reduction in claims frequency as identified by our analysis. In fact, 64% of the 2.7million cars we analysed in Europe were equipped with a core safety feature and were found to deliver a reduction in claims frequency.
To help motor insurance providers make a quick assessment of risk, we have developed a Rating Indicator which offers a value from 0-5 in terms of reducing claims frequency based on all the features on a specific vehicle. The higher the number, the better the performance. In our European analysis, 57% of vehicles had an ADAS Rating Indicator of 0 or higher, and we found there was a 14% reduction in loss ratios when the vehicle had an ADAS Rating Indicator of 1 or morev.
This is all part and parcel of LexisNexis® Vehicle Build, a new data solution that has gone through testing in the market over the past year to enable insurance providers to understand and evaluate the specific
standard and optional ADAS fitted to a vehicle at VIN level. It won’t be long, with the advent of connected cars, that we can also help insurance providers understand if specific safety features can be disabled. And longer term, insurance providers may want to confirm when over the air updates have occurred that may enable new features to be activated on the vehicle.
Like ADAS developments, LexisNexis® Vehicle Build won’t stand still. It will keep pace with the shift in how certain features evolve from Driver Warning to Active Mitigation. For example, Collision Avoidance is starting to change from warning the driver, to a mitigating act so the car will brake in an emergency.
Where multiple systems are fitted to a vehicle (often as part of an ‘Assistance Pack’) we are seeing examples of sensor fusion that help increase both assistance and safety. For example, data feeds from Driver Monitoring; Forward Collision; Lane Assist & Blind Spot are being used to safely bring a vehicle to a stop if the driver has not made certain corrective actions to the vehicles speed or direction and is therefore deemed ‘unresponsive’. This is perhaps in the case of a medical emergency.
Geo-location and mapping data is also being developed for inclusion into ADAS systems such as Lane Assistance and Speed Limiting. This will consider the actual vehicle location and surrounding conditions to supplement data from onboard cameras and sensors.
There is no question that as ADAS becomes commonplace and the capabilities of these systems continue to develop, the nature of motor insurance claims may change over time. Insurance providers ‘in the know’ about ADAS will be in a better position to price accurately, compete effectively and deliver a more personalised service to customers.
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