Webinar: How to win with telematics at quote
Speakers:
- Louisa Harbage-Edell, Director of Product Marketing and Intelligence, Arity
- Henry Kowal, Director of Product Management, Arity
- Ryan Lockwood, Head Of Customer Experience, Connected Analytics Services
- Joe Guerin, General Manager, Connected Analytics Services
Transcript
Louisa Harbage-Edell, Arity:
Welcome everyone. Delighted to have you all here for our session on How to Win with Telematics Pricing at Quote presented by Arity, which is a mobility data and insights company. My name is Louisa Harbage-Edell. I’m the Director of Product Marketing and Intelligence for Arity. I’ve been working in the insurance industry for over 20 years now, most of that dealing with telematics. We are really excited about this because – I don’t know how many of you have been working at this the way I have – but the promise of telematics is phenomenal, and yet the reality of it has really been limited to the number of consumers willing to opt in to traditional telematics programs. But what if we could unlock that power the way we do with credit today and just have a pool of driving data on every consumer at time of quote? That’s what we’re here to talk about today. Over the next 50 minutes, I’m going to lead an informal panel with my friends here, all of them experts in telematics data, and we’re going to get to the heart of how we can really solve this problem and unlock telematics data to bring real value.
I think maybe we should just start by introducing our panelists. Henry, do you mind kicking us off?
Henry Kowal, Arity:
Sure. Hi there. I am Henry Kowal. I’m a group product manager at Arity within our insurance solutions segment. So I’m responsible for the insurance product strategy, particularly of emerging products such as our Arity IQ product, which is providing telematics data at quote. So prior to Arity, I worked for The Hartford within their personal lines insurance business where I was responsible for launching and managing their smartphone-based telematics program in over 40 states. So I pretty much lived and breathed telematics. So that’s my story.
Ryan Lockwood:
Okay. My name is Ryan Lockwood. I work for a Toyota affiliate called Connected Analytics Services. We are the designated consumer reporting agency responsible for ingesting telematics data from connected Toyota and Lexus vehicles, and we are creating business opportunities to provide that data for various insurance use cases with an overall goal of improving the ownership experience. Prior to Toyota, I worked for ATT mobility building mobile application businesses for about a decade. Prior to that, I worked for Microsoft in the Windows mobile and mobile embedded devices group. One of the things that excites me about Toyota is that we get to do it all over again. This is a new technology, presents new opportunities, and looking forward to figuring out how we can leverage it. Thanks, Ryan. So good afternoon everyone.
Joe Guerin:
My name is Joe Guerin and I’m the general manager for Connected Analytics Services, or CAS for short. Just to add on to what Ryan was saying, so CAS is part of a broader organization that includes two sister companies. So on one hand you have Toyota Insurance, which is an independent insurance agency, and we partner with a variety of carriers, about 25 different national and regional carriers as an independent agency. And we do things like we place agents directly inside dealerships that includes Toyota dealerships, Lexus dealerships, and also Mazda dealerships. And then we also have a call center and an online presence. But in essence, Toyota Insurance is an independent agency that works nationally. And so in addition to that, Toyota Insurance is also a broker on behalf of Toyota Motors, north America and Toyota Financial Services for a lot of their mobility initiatives on the commercial side.
And just to add a little bit more onto CAS, so CAS was really created to empower Toyota and Lexus owners with their data. And in practical terms, what that means is we allow those owners to be able to use their data at time of quote to benefit and hopefully save money on insurance. And then in order to do that, we have to have what we call a data furnishing agreement in place. So we have a data furnishing agreement in place with Toyota and Lexus today, and that gives us proprietary access to all of the telematics data that comes off the vehicles. And that technology became available starting in 2018, both on the Toyota and Lexus side. And that has grown since then. Today when you buy a new Toyota or Lexus, other than the Supra, every other car is connected and the SRA is not connected because the people who buy that car don’t want it to be basically. So that’s
Louisa Harbage-Edell, Arity:
Excellent. So before we dive into the meat of the conversation, I’m going to force a little bit of audience participation. It’s too late to leave, so don’t run for the doors, I promise this won’t be painful. I’m not going to make anyone come up on stage. I’m not going to hypnotize anyone to cluck like a chicken. And if you participate, you’ll get a little bit more out of the session. We are going to tailor it to meet your needs. So just by a simple show of hands, how many of you have heard the term “telematics” before and know what it means?
Okay, most of you in the room, so we’re going to skip defining telematics. I hope that’s okay. How many of you have worked at a company or worked on a program with a telematics solution? Either a carrier, a vendor, anyone with a telematics program in place? Fantastic. I’m going to not bother explaining how traditional telematics programs work. We’re going to jump straight into the meat of this last question. How many of you believe in the value of telematics data? Okay, most of you, that feels great. Sometimes we have to start by justifying telematics data. So we’re going to dive right in with that. Then I will say, there’s a few of you over here, I can’t see you, and if I can’t see you, that makes me sad. So will those of you just in this corner move a couple seats over because either I’m going to do this or I’m going to feel like I have to wrestle this podium out of my way.
Thank you. I really appreciate it. Alright, so if we all know and believe that telematics data is valuable, and I don’t know about you all, but I’ve been doing this, like I said for 20 years. Why are these programs so slow to grow? I think the most recent stat I saw was that something like 16% of policies enforced today are telematics based. You can argue whether that’s continuous connections or things like that. I know I’ve seen a stat from Allstate whose program Arity powers, 40% of their new business is written into a telematics program. But even then we want it to be everything, right? Or we want it to be the majority of our book of business when you know the value of the data. So Henry, you’ve been doing this for a long time. Are you surprised by the friction we see?
Henry Kowal, Arity:
No, not surprised at all, but I think there’s a number of reasons for this, right? So there’s the technology aspect, there’s the customer adoption consideration, and then not to forget the agent adoption as well. So if we talk about the technology, telematics essentially first started with those OBD – II devices, those dongle devices that you plug into your car. And so from an insurer perspective, those were really cost prohibitive. So that made it really challenging for insurer to really scale up their telematics program just because of the pure expense. But in addition to that, there were a number of friction points, I’ll say with it with dongles. So I want to share this is a true story. So when I got into telematics, I decided, hey, let me sign up for a dongle program and see how this works. So I signed up and guess what happened?
I had to wait. I had to wait to have this device shipped to me. Alright, so two weeks later, this device arrives in the mail, check my mailbox after work, guess what? I’m in my work suit. This was pre-Covid, so wearing a work suit, not Bermuda shorts type of thing in a remote environment. So honestly, I didn’t want to get down on my hands and knees, figure out where do I plug in this device? So I went into my house, put it on the kitchen counter, and I said, I’ll do it later, well “later” translated into several weeks later. And guess what? This customer experience, not uncommon. So that was kind of the issue with the technology. Now most programs have migrated over to mobile apps, so that’s great. It’s addressed a lot of the friction points, maybe even eliminated some of the friction points such as the mailing of the device and having to wait for it.
However, mobile has its own challenges, right? Users have to enable their location services, they also have to enable their motion fitness, but guess what? They have to keep those on. As soon as they turn them off, the telematics app won’t work and won’t be able to track their driving afterwards. So there’s that customer kind of adoption issue. But in addition to that, there’s the whole notion of Big Brother. Why does my insurance company want to track my driving? Right? What are they looking for? And a lot of programs offer a discount, 10%, some even as high as 15% now to try to entice folks to enroll in their telematics programs. But for some people, it is just not worth the cost. And then finally, there’s the agent adoption. Now in terms of agent adoption, I would say in the most simplest forms, and those who are in sales I think would understand this, they just want to sell car insurance. One, they want to sell car insurance and they want the sale to happen quickly so they can move on to the next sale. So the thought of having to explain what a telematics program is and how it works to a consumer, it’s not something that typically appeals to agents. So long story short, no, I’m not surprised that the adoption rate of telematics has been slow.
Louisa Harbage-Edell, Arity:
And obviously if you haven’t guessed by the title here, what we think would really address this is having data at time of quote. It jumps over a lot of the issues with traditional telematics programs. You have the data, it’s ready to go, it’s ready to price on, but let’s put a pin in that and talk a little bit more about the data. First, we’ve talked about OBD – II and mobile, but OEM data is phenomenally rich. Can I ask you to talk a little bit about, assuming our audience knows the data typically collected by traditional telematics programs, some of the differences in what you see happy to?
Ryan Lockwood:
So there are some differences. If you think about connected cars, let’s in this case talk about Toyotas and Lexuses. There are several hundred data attributes. We currently ingest 54 because we don’t want the rest of ’em because the data’s expensive, but there’s a sensor literally every few inches all around the car. That presents some interesting opportunities. If you think about some of those opportunities where I think there’s more that we can do today and we can detect when somebody changes lanes without using a turn signal. We can detect when they have those ADAS (advanced driver-assistance system) features enabled. We can detect when a pre-collision system was engaged, not just when the tires are skidding, spinning, or sliding. That’s stuff we’ve been able to do for a while as well. We can also tell how many people are in the car, are their seat belts buckled? So there’s some interesting opportunities presented there From an insurance standpoint, in our internal analysis, when we look at mobile data that comes from mobile apps, and we haven’t done as much analysis with OBDs, but the data can be really noisy because as Henry mentioned, you can turn off location services for a trip, you can leave your phone at home.
In some cases the data doesn’t transmit as well when it’s in different points of the car. If you hand the phone to somebody else, like your kid in the backseat and they’re playing a game, it looks like distracted driving. So there are differences in the data sets. You can also, in some mobile programs, you can say, this wasn’t me, this wasn’t my trip. One of the things that we cannot do today and candidly won’t be able to do into the foreseeable future is determine when somebody’s actually looking at their phone while driving. You can kind of infer it based upon driving behavior, but we can’t today. There is no connection between the car itself and the mobile device.
Louisa Harbage-Edell, Arity:
So understanding the richness of OEM data, we’ve talked a little bit about why insurers have gone to mobile solutions with traditional telematics programs. Can you talk about why Arity is really thinking about mobile first, at least for now with their data at time of quote program,
Henry Kowal, Arity:
Henry? Sure. So I think there’s maybe three main reasons for that. One I would say is the cost, right? So I had mentioned how the dongle program or the dongle device itself was really expensive. Conversely, the…a mobile app, the telematics mobile app is much more cost effective. So that cost benefit equation and making that ROI work is much easily done with the mobile app. The other thing is scale, just the ubiquity of smartphones, right? So I’m going to ask a question. Yeah, please of the audience. Raise your hand if you don’t have a smartphone now, if you don’t have one, don’t be shy. Raise your hand, right? So it just goes,
Louisa Harbage-Edell, Arity:
Here’s the follow up. How many of you have at least one app on your phone with location enabled? Yeah…
Henry Kowal, Arity:
Exactly.
Louisa Harbage-Edell, Arity:
To be fair, I think the stat across the entire U.S. population is something like 90% of Americans own a smartphone and pretty much all of ’em have location services enabled. At least one app doesn’t mean we can get into every phone with every app, but certainly makes for a big pool.
Henry Kowal, Arity:
Yeah, the opportunity is there again, that kind of mass scale of folks that have Google phones. And the third item about mobile phones is something that Ryan touched on is the ability of within mobile app to detect phone distraction. So that’s really critical because even if we think about it from an intuitive basis, I think we all pretty much know that if you’re driving while talking on the phone or texting, that’s pretty risky behavior. And what we see is that about 17% of crashes are due to distracted driving. And what we also see is sadly that fatalities from crashes have been increasing. So in 2020, NHTSA reported that about 38,000 fatalities occurred in 2020 and they’re projecting about 43,000 fatalities in 2021. Now that’s a pretty sobering number, but when you compare that to the fact that that’s the highest it’s been since 2005, that’s kind of mind blowing, but also kind of sad at the same time. So the ability to be able to capture phone distraction, at least from the insurer perspective and being able to appropriately price for that risk is critical. Yeah,
Louisa Harbage-Edell, Arity:
Absolutely. But obviously we all want the OEM data, so can you talk a little bit about how you’re thinking about getting that scale with regards to connected vehicle
[Offscreen]:
Take…No, go ahead.
Ryan Lockwood:
So Joe mentioned this, right in his intro, the first connected Toyotas came online 2018, a couple models this year. It’s all except for the SRA essentially, and we’re adding about 200,000 every single month. One of the things that from a Toyota perspective we do is as part of the point of sale experience, and most OEMs do this, you’re invited to install the Toyota mobile app, some new feet and some neat features and need – gee whiz features, the ability to remote-start your car, see how much gas is in your car, stuff like that. And one of the other things that we encourage people to do, and 90 plus percent of them do it today, is opt in to various connected services, connected features. One of them is an option to opt in to share your data for opportunities to save money on insurance owns. One of the unique challenges that we face today is when a customer sells that car to somebody else, we’re fearful that we’re going to lose some of those initial opt-ins. So we’re working on options to solve for that. But today it is part of the sales experience when you buy a connected Toyota or Lexus.
Joe Guerin:
Yeah, I guess the only thing I would add to that, obviously to get to scale and for our Toyota owners and Lexus owners to be able to share their data, we have to have partner carriers. And so today we have a product in market today that we call data quote, which is allows someone to share their data in real time. And you can do that with several of the top 10 carriers. But we as an organization are carrier agnostic. So our goal is to work with as many carriers as we can so that regardless of what insurance company I have, I have the ability to share my data.
Henry Kowal, Arity:
Hey, Louisa, Joe mentions about being carrier agnostic. I think one thing I would also want to add is that at Arity, we’re data agnostic. So even though we’re talking about the mass scale of mobile data, I think as we see OEM data is growing and it’s going to be the future. So at Arity we love data, so we don’t care if it comes from mobile, we don’t care if it comes from dongle and we don’t care if it comes from OEM. We just want all of that data. So certainly we’re looking to grow our Arity IQ database with OEM data as well.
Louisa Harbage-Edell, Arity:
Absolutely. And I know I’ve seen projections. I think you all are on a faster track, but the connected cars are beholden to vehicle turnover, consumer purchase rates and things, but certainly expected to reach over 90% of all vehicles on the road by 2035 or even sooner. So…
Ryan Lockwood:
I’ll take your word for it.
Louisa Harbage-Edell, Arity:
Fair enough. So we’re talking telematics here and certainly that’s the crux of things for us, but it’s not the only challenge facing the auto insurance industry today. There’s so many pressures, it’s kind of unlike anything I’ve ever seen during my career. Henry, could you talk a little bit about some of what you’re seeing? Because I know from my perspective, having access to telematics data in some ways is more critical than ever right now.
Henry Kowal, Arity:
Yeah, for sure. I’m curious if there’s any pricing actuaries, auto pricing, actuaries in the audience or anybody responsible for an auto P and L? I won’t call you out, but I can really empathize with you and my friends back at The Hartford where I used to be before ity because there’s just a number of market pressures right now that are really squeezing profitability and also negatively impacting lost costs. So let me see if I can unpack all of these things, at least a few. Yeah, just a few. So one thing that we see since the pandemic, when the pandemic started, the miles driven went down, roads were empty, however, people started driving with really risky behavior. So we saw increase in speeds and we saw increase in phone distraction. Now fast forward to 2022 miles driven is higher than 2019 and just keeps going up. So now the rows are full of cars, but guess what? People are still driving with those risky behaviors. They’re still speeding and they’re still a lot of phone distraction. And so what we’re seeing is a lot of severe car accidents and that leads to higher liability costs. So that’s a major market pressure that we see in the industry today,
Louisa Harbage-Edell, Arity:
And we’re able to get that insight because of data that Arity has.
Henry Kowal, Arity:
Yeah, exactly. We’re able through some of the apps that we power with our crash detection feature, we’re able to capture when there are crashes through our telematics programs out there in the marketplace. We’re also able to have a pulse on the driving behaviors that are out there. And so we see both the increased mileage that’s occurring, but we also see the increased speed and the increased distraction. And one more thing I’ll add is that that’s also not abating. It kind of those risky behaviors peaked in 2021 came down a little bit in 2022, but guess what? Now they’re trending back up. So I think that’s as good as a crystal ball as to forecasting that, hey, these behaviors are going to persist and we’re going to see, we’re going to continue to see this high severity in terms of serious accidents. Yeah,
Louisa Harbage-Edell, Arity:
Obviously I think we’re all aware of things like inflation, rising claims costs, supply chain issues, microchips supply issues, but then we also have other things like pressure on rating variables.
Henry Kowal, Arity:
So there are a number of traditional rating variables that are coming under regulatory scrutiny. So that includes things such as credit, that includes things such as age and gender. So regulators are looking at these traditional variables and they’re like, is there bias associated with these? And so interestingly enough, in 2021, Arity did a consumer survey and the majority overwhelming consumers said that, Hey, I’d rather be priced on auto insurance based on how I drive or my driving record versus who I am. My demographics and kind of where I live and what my background is…
Louisa Harbage-Edell, Arity:
Things like, do I brake hard or do I choose to speed – feel controllable?
Henry Kowal, Arity:
And that I think just kind of further underscores the importance of telematics and using it for risk segmentation and for pricing.
Louisa Harbage-Edell, Arity:
Absolutely. Obviously, another thing that’s top of mind for consumers is privacy. And when we’re dealing with telematics data, which feels very personal, that’s a really important issue. So can you talk a little bit about how you all think about privacy and maybe specifically how you protect data? And Joe, do you want to take a stab?
Joe Guerin:
Sure.
Louisa Harbage-Edell, Arity:
It’s a big question.
Joe Guerin:
Yeah. So no, obviously as a consumer reporting agency, taking privacy seriously is foundational to what we do. So just like everyone else in this space, we look at things like FCRA is to help set that foundation and make sure we’re following that regulation. We also look to guidance for things like G L B A and C C P A as part of our overall privacy strategy. But just as importantly, we adhere to the auto privacy principles. And part of the reason we do that is because T to help author them. And so when we work with a carrier partner, we try to weave some of what’s in those auto privacy principles into our relationship. And for example, we have system security and data handling guidelines that we work with carrier partners on and make sure we’re on the same page in terms of how that customer’s data is being handled.
But what it’s really consumed to play is customer consent. So Toyota and Lexus and their app have what they call a data privacy portal. And when I first buy a Toyota or Lexus, I’m offered various connected services, things like Service connect, wifi connect, safety connect. One of those services is what we call insure connect. So I download the app, I agree to a master data handling consent, and that allows, that’s letting the consumer know that your car’s emitting data and Toyota has that data. If you then sign up for that insured connect separate service at that point then has then gets access to that data and we start downloading, ingesting that data on a daily basis. And then when we work with a carrier partner to pass them data, for example, at time of quote, there is actually an additional consent that takes place on their property.
So for example, we have a product out there in place today with Liberty Mutual and the language on the Liberty Mutual platform that the customer reads when they agree to share their data is something that we collaborated on that was between CAS and Liberty Mutual. And that’s what we do with all of our partner carriers. So consent is really a multi-step process for us, and that really ensures that the customer understands where my data’s coming from, who I’m sharing it with and what kind of data I’m actually sharing. Those three things have to be in place. And then lastly that I would say as part of that data privacy portal, you have the opportunity in the Toyota app or even on the Toyota owner’s website to share your data, but just as importantly, you have opportunity to stop sharing your data. So at any time I can go into my Toyota Mobile app, go to that data privacy portal, see everything that I’ve consented for, and if there’s one thing I choose to stop sharing my data on, I can simply choose to do that at any time. And then once they do that, the data stops flowing. And so we look at, obviously it’s important for our business that people consent because we can’t share the data, but it’s just as importantly that folks have the opportunity when they want to stop sharing that data.
Louisa Harbage-Edell, Arity:
Henry, anything you’d add from Arity’s perspective?
Henry Kowal, Arity:
Yeah, I think just to kind of reinforce what Joe shared, I would say it’s all about being upfront and being transparent with customers and understanding kind of that value exchange. What are they getting in exchange for providing their data, but also giving them the ability to opt in to providing that data and conversely giving them the opportunity to opt out if they change their mind. So I do want to stress that kind of that two consent approach. So with Arity, when we work with mobile publishers, we want to make sure that they have a really robust privacy program in place, and we want to ensure that when users download these consumer apps, that they’re fully aware that in exchange for the value that’s provided, they’ll be sharing their driving data with Arity. So that’s kind of step one in the consent process. But then in terms of that same user when they’re actually shopping for auto insurance at point of quote, have while we have to get their consent to be able to pull their driving data and price them with that data add quote. So again, the consumer has that two-step consent process.
Louisa Harbage-Edell, Arity:
Absolutely. You mentioned that value exchange as being a really important part of the opt-in. Obviously with traditional telematics programs that’s all about discounts and better pricing on your insurance. Can you talk a little bit about what that value exchange, how you incentivize opt-ins with mobile app relationships?
Henry Kowal, Arity:
Sure. So it’s really about meeting consumers where they’re at, and that’s essentially the consumer apps that they use today on an everyday basis and that they’re also used to sharing their driving location data. So some examples of that is Life 360, which is a family security app. Another example of that is a gas saving feature through gas buddy and then some weather apps where you’re sharing your location data. So that would be like WeatherBug or MyRadar. So let me give you an example. So for Life360 Arity powers Life360’s crash detection feature. So it detects a crash, it sends out a notification and so forth. So it fits into Life360‘s value proposition of providing family safety and security. So in exchange for this feature or this service users agree that they’ll share their driving data information with Arity, right? But again, it is kind of providing that value and has nothing to do with insurance. It’s not like a traditional telematics program where we’re saying, share your data with us and then we’ll give you an insurance discount. It has nothing to do with that. It’s really more about the everyday apps that consumers use today.
Louisa Harbage-Edell, Arity:
Joe, I know you talked about the nature of how organic it is with opt-in when people buy the car sort of at the beginning. I don’t know if there’s anything you’d add as you think about opt-ins here.
Joe Guerin:
Yeah, I think the simplest way to incentivize getting consent, at least at time or quote is for them to understand that if I’m a good driver, I’m potentially going to save money. So that messaging there, I think that’s the most basic thing. But the other thing that we are very wary of is that when we work with carrier partners, what’s really important to them, as many of you I’m sure know, is that their quote completion rate is critical to success, right? If somebody doesn’t complete a quote, they’re never going to buy a policy. So even though we need to make sure that the consent process is transparent, we don’t want it to be too cumbersome. And we also understand that a big insurance company is not just going to work with Toyota, that they’re going to have a relationship with GM and a relationship with Ford. And so however that can sense worded and may have to be more generalized to account for the fact that that person could be driving any make and model. So things like referencing, “Hey, looks like you’re driving a connected car, would you like to share your data?”
Henry Kowal, Arity:
Versus it looks like you’re driving.
Louisa Harbage-Edell, Arity:
Yeah, absolutely. Well, this is maybe a good moment to talk specifically about the solutions and we certainly aren’t the only options for data at point of sale, but I personally think there they’re some of the best. So Henry, do you want to talk a little bit about Arity IQ and how it works?
Henry Kowal, Arity:
Sure. So Arity IQ is essentially using telematics data at point of sale. So that’s a completely different paradigm from the traditional approach whereby a user shops for auto insurance is asked, Hey, do you want to enroll in this telematics program? We’ll give you a 10% discount and then we’ll monitor your driving over six months and then determine should you get a bigger discount, a lesser discount. That’s not it. Arity IQ is having that telematics data right there at point of sale. So the power of that is that an insurer is able to use that enhance risk segmentation to better price our customers. So how does it work? It’s essentially an A P I call that is made to our Arity IQ database. Right now we’ve grown our database to about 44 million mobile connections. That’s about 18% of licensed drivers in the us and that just continues to grow. And so what will return to the insurance carrier is a driving score. Now this driving score is powered by our driving algorithm. It’s our own proprietary algorithm that has been developed using billions and billions of miles of driving data tied to actual claims losses. Now I want to point out actual claims losses. There’s a nuance there. It’s not modeled, it’s not predicted claims losses, it’s actual claims losses, and that’s what helps to make the Arity score very predictive of loss.
Louisa Harbage-Edell, Arity:
And for large insurers who already have a telematics program in place and maybe don’t want to use a prepackaged score, are there other options?
Henry Kowal, Arity:
Yes. So I am happy to share that in the first half of 2023, we’ll be launching our Arity IQ Attributes product instead of sending over a score to the insurer when they pinging the database. Instead, we’ll send over our highly predictive attributes that are predictive of insurance losses and the carrier will be able to use those attributes and apply their own scoring algorithm to it.
Louisa Harbage-Edell, Arity:
Excellent. So deep understanding of risk rate scale. We know OEM has a lot of additional attributes and things available. Can you talk about your data at quote program?
Ryan Lockwood:
Excuse me. Happy to. So you want data, you don’t care where it comes from? I don’t. We want supply that data, assuming a customer wants to share it someplace, which is kind a fundamental philosophical principle. The way we view this, all we’re doing is presenting Toyota owners with an option to share their data if they want to share it. And we also don’t want to interrupt the quote flow. So if we don’t have data, we don’t want to present. We don’t want you to have to present a question to a customer when no data exists. So the mechanics of this are fairly straightforward. In the middle of a quote flow, you call us asking us, passing whatever P I I you have and ideally a VIN. But we can also do it with your make model. It’s easier with a VIN. And what we’re going to do is look to make sure, do we have this? Do we have this PII in our database? Do we have the amount of data that you want to be able to score and we’ll give you a positive or negative response. Yes, we have the data, no, we don’t. If we give you a yes response, you present the customer with a consent, we record that consent and then share the location of the data back with you.
Louisa Harbage-Edell, Arity:
Fantastic. So I know we’ve just barely touched on these, but I want to be conscious of time. I have one last show of hands, question for you all. Show of hands, who has a question they’d like to ask?
Joe Guerin:
It’s a trick…
Louisa Harbage-Edell, Arity:
Question. It is a trick question. Yes, I think we’ve got a microphone floating around, but I can probably hear you from here.
Audience member 1:
[From the audience] So first of all, firm believer [inaudible] perceive this data sharing as a double-edged sword. Yes, insurers will be able to prove the time at fault. So how that statement [inaudible]
Louisa Harbage-Edell, Arity:
Yeah, absolutely. Henry, do you or
Joe Guerin:
Can you repeat the question?
Louisa Harbage-Edell, Arity:
Yeah, and maybe for those of you in the back who can’t hear. So one of the customer concerns that certainly comes up is what happens if data is used during the claims process potentially to prove that I’m at fault in an accident or something like that? How do we handle those types of concerns?
Joe Guerin:
I could start, I guess the first thing is we’ve mostly talked about data quote. We also, we’ll be launching a first notice of loss product and in the near future. But the same thing comes to play as a desk when you’re sharing your data time of quote, and that you have to consent to do it. So I suppose if I know for a fact that I did something bad, I just may choose not to consent on the other things. It isn’t always pure fault versus not at fault. So the way we look at it and the way that we would position asking that question is, would you like to share your data to make the claims process more efficient? And someone may still choose not to share their data, and that’s okay. And I think that that’s going to happen. And on the U B I side with some of our carrier partners today, I think we’re somewhere in the 70% range. So when someone’s presented with an opportunity to share their data at quote, about 70% of the time they agree to share it, we don’t know yet what that’s going to look like on the claim side. My guess is it will be a little less than that, but we’re accounting for that and how we want to present this.
Henry Kowal, Arity:
And I think beyond just looking at it from kind of this at-fault perspective, it’s the benefit to the consumer. So if I’m in an accident and I’m not at fault, I want that kind of restoration. I want to be whole and I want it to be done quick. I don’t want this claim to be adjudicated over weeks. I don’t want to have to potentially rent a car and have this car rental for several weeks as an insurance company collects all of the data and so forth. And this is something that telematics would help with help to collect the kind of crash forensics data at the point of the accident and help shorten that claim adjudication lifecycle.
Ryan Lockwood:
Can I just add one quick point there? I mean this is one of the things where I think we’re really just scratching the surface here. There’s so much potential with telematics data as it relates to claims. If you think about it, there’s a live stream coming off all these cars and we’re looking for anomalous events where it’s something that looks like a collision. We have the ability to tell that customer, whether it’s through a mobile app or whether it’s through our own mobile app, Hey, it looks like you were just in an accident. You want to start a claim. But think about that. So having the ability to see exactly when and exactly where and Delta V type of data right then and there, it resolves a whole bunch of claims immediately and you don’t have to wait for police reports and then run the risk of a police report being subjective based upon how it was written up and stuff like that. So it solves a bunch of problems as it relates to claims.
Joe Guerin:
And just as an example, you could probably infer whether something’s a total loss. So if it’s like correct me if I’m saying this wrong, a two G event – a two G event, that’s a good chance to that total loss. So at that point, the carrier can then quickly get that to their total loss department after opposed to waiting to figure they can in real time, they can know whether that’s a likely total loss. Just as one example.
Louisa Harbage-Edell, Arity:
It’s certainly an instance where the interesting thing about this is because the data is originated outside of the insurance company, ownership of the data becomes an interesting question. The consumer owning the data versus the insurance
Joe Guerin:
Company. Yeah, I think the other way we look at consent differently in a U B I use case claims use case is in the U B I use case, it’s very clear you’re just sharing that data with that carrier. So they’re going to use that to help price that policy, whether that’s immediately or on an ongoing basis and maybe even use that data at right. So those things we’re talking carriers about. But on the claim side, you also have to keep in mind that that carrier may need to share that data with another third party. So if that claim goes to segregation or arbitration, they may have to share it with arbitrator, they may share it with another carrier. And so we have to make sure that our language reflects that and so that as a consumer, I’m aware, hey, I’m not just sharing this data with my particular carrier. My carrier may have to in turn share that data with another party because there’s a conflict there. So there’s a little bit extra nuances when it comes to claims.
Louisa Harbage-Edell, Arity:
Other questions we could keep going on about that? I know we talk, I mean there’s precedent with subpoenas. Insurance carriers have already wrestled this.
Joe Guerin:
I just wanted to add one thing to where Ryan was talking about our data at product and that when I mentioned someone is in the app or on Toyota owners and they consent to ensure connect as we ingest that data on a daily basis. But in addition to that, we have to pre-process that data. So we work with carrier partners and the way that we pre-process data for one carrier is not the exact same way we do it for another. And then what we actually do, unlike what Arity is doing, we don’t provide them an output. We’re simply providing them a summarized dataset per their specifications. The reason why it’s so important that we pre-process that data is because they have SLA, they need that data in sub-two seconds so that they can then run it against their algorithm and then determine a price two pages later. So I think that’s an important part, at least of the data quote. That’s an important part of that process.
Henry Kowal, Arity:
So I think for those of you that are familiar with the underwriting of auto insurance and kind of how that works, it is really akin to pinging for a credit score or pinging for past claim history or for motor vehicle records. So at quote, when a customer is shopping, you pinging these different third party sources of data and they’re return and they’re factored into the price that the customer will pay. So in this case, you’re pinging to get telematics driving behavior at point of sale as well. So again, you have this really rich, highly segmented data that you could use not only to better price customers, but also say to use to help grow your business, particularly with the safest drivers, right? Because if you could better segment those truly safe drivers, well guess what? You can offer them a better price. You could get them on the books and hopefully you retain them for the life of their policy
Louisa Harbage-Edell, Arity:
Or counterpoint. Progressive made their bread and butter by better segmenting the tier four drivers and filtering for the top of tier four and understanding if they could really reward and grab those people, they were never going to leave because they couldn’t get a better price elsewhere.
Henry Kowal, Arity:
Exactly.
Louisa Harbage-Edell, Arity:
There’s a lot of ways to think about it. Any other questions? Yeah,
Audience member 2:
So I’m going to ask the topical question first and give a little bit of background. If you guys think strategically, how through consumer engage, do you think about a vision where we don’t need locations? And I think as you look at statements that Google and Apple about purging location data and light social, is there a vision where we can still use heartbreaking phone distraction, acceleration, cornering without needing location on all the time?
Louisa Harbage-Edell, Arity:
Could you all hear that? The question was around whether we needed, did you hear, we saw a future for telematics where we didn’t need location on all the time In light of the statements from Apple and Google about purging location data and current events.
Ryan Lockwood:
I’ll be blunt know from my perspective because as our current strategy, and this is Toyota Lexus strategy, every location is required for every single service we have as of today. Now, having said that, the counterpoint to that is we take privacy. It’s critically important. We give customers transparency in terms of how their data’s being used, given ’em an option to turn it off. We only hold onto data as long as we need to, all that kind of stuff. But I actually think there’s a customer perception issue more than anything because I’m dumbfounded at how many people use a smartphone every day and share everything about themselves on their smartphone, and yet they’re paranoid about the data that comes off their car, which is minuscule by comparison.
Louisa Harbage-Edell, Arity:
The people who let Candy Crush know everything about them, but worry about what Google knows.
Henry Kowal, Arity:
Yeah, I think it’s also looking at how that location data is used. So as an insurer, it’s not necessarily kind of like what are the places that you’re frequenting? And I know with some of the things going on from a political nature is like, are you visiting certain establishments and so forth? That’s really not the case. It’s really looking more at the events that happen. So using that location data that those g p s trails to determine were they speeding? Also using that location data to determine were they hard braking? Were they using their phone? So in a way, I would say using the term location data is a bit of a misnomer because we’re more so looking at the events and using that G P S data to determine whether those events occurred and to what degree they occurred.
Joe Guerin:
And we also make sure that when we give somebody a consent language, we can’t list out all the different things that we’re not going to list out 54 data elements or 15 or whatever we list out. Four or five are the most common ones, but we make it a point to include location in that statement because we want them to know that we’re aware. That’s pivotal to, I think a perfect example of that is when you’re looking at speed without knowing what location they’re at, you don’t know what the speed limit. And so really locations used to determine speed. We don’t for this particular product, for data quote in particular, where your ads is not necessarily as important as how often you’re speeding, but you use the location, determine speed. That’s where it gets complex.
Louisa Harbage-Edell, Arity:
I want to be respectful of time. We are at the end of the session. All of us will be here afterwards if you want to ask questions. I know it feels like every year there’s a headline that says The future of telematics is now and then we continue the slow grind on, but I hesitate to say I really feel like we’re finally approaching that final frontier. We’ve all been dreaming about. I know we have major insurers in market with these products. I’m really excited to see how this continues to evolve in the future. Thank you all so much for joining us here today. Really appreciate it. Thank you.