Arity at AIR 2024: Latest driving trends’ impact on auto insurance

Following two of the hardest years for auto insurers, the 2024 Auto Insurance Report (AIR) National Conference focused a lot of its content on finding a way forward for the industry. And there was no better way to kick things off than with a conversation between Brian P. Sullivan  and Arity President Gary Hallgren.

Looking into Arity’s driving behavior dataset, they explored what’s happening on our roadways along with how auto insurers can effectively navigate their businesses amidst the constant changes in driving behavior. Here are five key takeaways from the conversation.

Arity by the numbers: More than 1.5 trillion miles of driving data collected and analyzed since inception, more than 1 billion miles of driving data collected every day, and more than 40 million U.S. driver risk scores available at new business.

#1 People are driving more

Throughout the COVID-19 pandemic, we published weekly reports on driving behavior trends to help inform critical business decisions. For instance, many insurers gave money back to drivers as the number of miles driven plummeted nationwide. However, that behavior only lasted a few months as driving levels rebounded by mid-summer 2020.

Since then, we’ve seen a new normal with people driving more miles than before the pandemic. From 2019 to 2023, total mileage increased 8% which means higher exposure for drivers, and therefore, a higher number of accidents. Not to mention, we’re also seeing a higher severity of accidents as well.

#2 People are driving riskier

It doesn’t help that as miles driven increases, distracted driving and speeding continue to be a major cause of risk on our roads.

Distracted driving

Over the past five years, distracted driving – or more specifically, phone handling behind the wheel – has increased more than 30%. And even though our data shows a slight year-over-year improvement from 2022 to 2023, the behavior persists.

High Speeds

While we were in lockdown, less vehicles were on the roads which gave drivers the opportunity to travel at higher speeds of 80+ mph. And even though miles driven has returned to those higher pre-pandemic levels, speeding continues to be an issue.

People driving more, coupled with the fact that they’re also driving riskier, raises significant challenges for insurers who are meant to protect them. Collisions that occur at higher forces are more likely to produce more concerning injuries as well as vehicle damage.

#3 People are migrating

While it seems like speeding should have declined as more and more drivers returned to the roads, a granular look into states and cities’ travel patterns shed light into why it didn’t rebound in the same way.

Due to workplace flexibility, a lot of people gave up their high-cost urban apartments in exchange for more space, freedom, and/or flexibility out in the suburbs and rural communities. For example, there’s a noticeable pattern of migration outside of the San Francisco Bay Area and Los Angeles into the neighboring counties.

This migration, in addition to some people (i.e., remote or hybrid workers) not commuting every day or avoiding the “traditional” rush hour, has led to less traffic congestion on our roads. Unlike before, trips tend to be more geographically dispersed, leaving room to travel at those higher speeds uninterrupted.

#4 Telematics 3.0: Insurers can best navigate these shifts with broader data sets

These shifts in driving behavior and commuting patterns are inevitably impacting each individual state and county’s risk profile, which means insurers need to uncover and adapt to the new normal of each one that they’re writing business in.

A new wave of telematics is available to help carriers solve for this:

• Telematics 1.0 brought us insurance telematics programs.
• Telematics 2.0 brought us data originated outside of insurance telematics apps to be used for pricing new business.
• Now, with driving behavior insights at scale, Telematics 3.0 empowers carriers to improve every part of their business. Telematics isn’t just for auto insurance pricing anymore.

With these insights, carriers can look beyond their book of business for trend selection, marketing, benchmarking, and to improve territorial segmentation. While glimpses of these trends may be present in their own data, it’s nowhere near the full picture.

And with Arity’s dataset – the largest driving behavior dataset tied to insurance claims – Telematics 3.0 is possible, and auto insurers can get a better, more granular, and more precise view into driver risk at any moment in time.

#5 Insurance telematics programs make a difference

In addition to using driving behavior data to adjust to risk trends, insurers can also use it to encourage and motivate customers to adopt safe driving behaviors through a telematics program.

When we compare those enrolled in a telematics program to the general population, there’s a clear difference in driving behavior – with participants exhibiting lower levels of risky driving behaviors year-over-year.

One of our partners, Allstate Insurance, recently proved that their Drivewise customers are safer on the road than other connected drivers. With insights from our database, we found that those enrolled in the program handle their phones 44% less while driving, spend 23% less of their driving distance traveling at high speeds, and have an 11% lower rate of hard braking.

Turning insights into action

While it’s important to know what’s happening on our roadways, it’s even more important to turn those insights into action. Following a difficult two years, Gary advises carriers to take these two immediate actions as a way forward:

• Driving data is most valuable when you watch trends at the local level as trends not only vary by state, but also county-by-county.
• It’s also extremely valuable to start using insights outside of your own telematics data to see a more complete picture, since using a more comprehensive dataset will empower better decisions for every part of your business.

Ready to learn more? Read how insurers can take action and leverage driving behavior data across the entire customer lifecycle.