How to price accurately at time of quote with telematics risk prediction

Auto insurers have historically relied on factors like age, credit history, zip code, and gender to predict the likelihood and cost of accidents. 

While insurers rely on these metrics to predict risk, proxies can’t always deliver the pricing accuracy insurers hope to achieve. Why? Because proxied factors alone often fail to provide visibility into actual driving behavior on the road.  

Insurers can understand more about what matters most for pricing — their customers’ real driving habits — by filling in pricing gaps with driving data.  

Proxies alone don’t cut it  

Insurers can understand more about what matters most for pricing — their customers’ real driving habits — by filling in pricing gaps with driving data.  

Insurers often rely too heavily on proxies without taking actual driving into account. This might cause them to make assumptions about their drivers and misprice them. For example, consider: 

  • A nurse with an overnight shift who is charged more for nighttime driving compared to a driver who is always speeding.  
  • A safe 20-year-old driver who has a higher premium than a middle-aged driver who texts while driving.  

The takeaway: Pricing drivers on proxies alone can lead to pricing gaps, causing you to underprice unsafe drivers and overprice drivers who should have received a cheaper rate. By using telematics risk prediction to sign higher value drivers with more accurate pricing, you can improve your book of business and achieve profitability faster.  

Price confidently with real driving behavior at quote 

Telematics data provides clearer visibility into your customers’ driving habits. Behaviors like hard braking, speeding, and distracted driving better indicate accident likelihood than proxies your customers can’t control.  

Telematics seems like an easy decision. However, many insurers prefer proxies over telematics because they believe proxies provide all the upfront information they need to price a driver. Insurers assume that telematics will require a monitoring period, which requires them to wait until they’ve collected sufficient driving data to price accurately.  

However, with driving behavior at time of quote, you can claim both the benefits of telematics risk prediction and instant pricing.  

Enter the Drivesight® scoring model. 

With the Drivesight® score, you can leverage the world’s largest telematics data set tied to actual claims for driver risk assessments that account for actual driving behavior. Drivesight® provides a driving score for your customers weighted on driving behaviors they can control. This score enables you to price all drivers more profitably.  

Additionally, by providing driving behavior scores at quote, the Drivesight® score eliminates monitoring periods and pricing adjustments down the road.  

Because we leverage data from one of the largest mobile telematics dataset, we are the only driving score on the market that considers claims frequency and severity. As a result, we generate scores that accurately predict future loss and driver risk, while offering programs that shift with the needs of insurers’ unique goals.  

Increase pricing accuracy and profitability with Arity 

At Arity, we turn driving data and insights into business solutions that improve your loss ratio and help you build a more profitable book of business.  

With access to driving scores at quote and accurate driver risk assessment, you’ll price more confidently, increase profitability, and improve customer satisfaction.  

Contact us today to learn more about our solutions.