Maybe we need a bigger, more rounded picture of actual real-time driver data, rather than just the blunt instrument of NCD history and postcodes, agreed?
The opportunities now via connected apps, vehicles and public databases is huge, but the benefits can only be extracted by rational sifting of the data streams. Insurance risk is evolving and we definitely need more data on both vehicles and drivers. Tech can help integrate that data into insurer and broker quote engines and add weight to specific factors. That could go a long way to reducing the rate of rising premiums as the UK copes with more battery powered cars and their associated extra claims costs.
This Traffic Score system from CRIF looks interesting, here’s the word;
Insurers will be able to make more informed decisions around motor cover, better understand potential risks and improve their loss ratios with the launch of CRIF’s new Traffic Exposure Score for the UK market.
With the new service, insurers can now leverage granular geographical data about a driver’s location, their daily commute and what hazards they could potentially encounter on the road, to help fine-tune their pricing strategy.
While insurers often try to estimate the risks of driving in certain areas and factor this into their premiums, CRIF’s service draws on data not normally used in insurance decision-making. The service utilises information from the open, proprietary and third-party data sources, to help estimate the probability of an individual being in a traffic accident based on where they live and drive in the UK.
Traffic Exposure Score only requires an insurer to provide a postcode for where a driver lives. With that it can provide a granular geographical score (from 1-14, where higher numbers mean higher risk), based on factors such as:
· Density of traffic-related points of interest (like nearby tube stations, bus stops and crossroads)
· The socio-demographic profile of the residents (which affects car protection levels)
· Other variables such as the make-up of the area (city centre, suburbs, industrial, etc.)
The launch comes at a time when the cost of insurance for motorists has increased by 46% in just one year, with the Association of British Insurers (ABI) announcing plans to work with the industry to bring down costs. CRIF’s service will help insurance companies to create a more accurate picture of the risks motorists may face and in turn help prevent those drivers who are lower risk from paying higher than necessary premiums.
Having previously launched in other European countries, Traffic Exposure Score can help insurers to reduce their loss ratio by between 1.5% and 2.5%.
Sara Costantini, CRIF’s Regional Director for the UK & Ireland, said:
“It is a difficult time for motorists, with the cost of insurance having increased significantly in the last year alone. This is making it harder for drivers to afford the cover they need, especially those who rely on it for their livelihood.
“Similarly for insurers, the rising cost of repairs and parts have driven up premium costs without necessarily increasing margins. The need to utilise data and analytics to take account of external factors like traffic conditions and the type of areas people drive in have therefore never been more crucial.
“With the launch of CRIF Traffic Exposure Score in the UK, we’re aiming to help the insurance industry to utilise the potential of granular statistical data to make better, more accurate decisions when insuring motorists. With this, we can help increase the accuracy of premiums for motorists, while helping lower costs for those drivers who are found to live in low risk areas.”
Currently, while the market is charging more for motor insurance, due in part to the rising cost of repairs and parts, margins for insurers remain low. Traffic Exposure Score helps with this by enabling insurers to better identify potential risks at an early stage and charge more accurate premiums that can increase their margins, while reducing undercharging due to unidentified risks.
The launch of Traffic Exposure Score is part of CRIF’s work to support the insurance and finance industries. Its launch comes after the announcement that it was bringing open banking services to automotive retailers offering BMW Financial Services, as well as the recent launch of ESG Analytics to help insurers better meet their sustainability goals.
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