Why insurers need to monitor, measure, and manage distracted driving

Mobile devices constantly pull drivers’ attention away from the road. Whether they’re mounted to the dash or sitting in a cup holder, devices can cause distracted driving and dangerous consequences. Addressing risk and reducing distracted driving requires an understanding of how users engage with devices on the road.

At the Auto Insurance Report National Conference, Arity President Gary Hallgren sat down for a conversation with Risk Information Editor Brian Sullivan to examine the state of distracted driving today, discussing how insurers can derive insights from mobility data to make roads safer for everyone. Below is a condensed version of the conversation, edited for clarity.

Brian Sullivan: Are people willing to accept that distracted driving is now part of the scoring model used in insurance pricing? And how are insurers getting consumers to agree to allow insurers to monitor how they use the phone?

Gary Hallgren: Distracted driving is top of mind for everyone – consumers, insurers, automakers – so it shouldn’t be too much of a surprise that it would be a component of insurance models. There needs to be greater dialogue between insurers and consumers around what information is collected off their phones and the impact their behavior has on the likelihood of causing an incident. Ultimately, behaviors resulting in distracted driving is a significant variable in models for one simple and important reason: It’s dangerous, and if we capture it, we can ultimately save lives.

BS: How have regulators reacted to adding this variable into scores?

GH: Largely, our regulatory partners have been very positive, and in some ways, it’s been easier to work through when compared with some of the other telematics data elements. Still, we understand there will always be hyper-sensitivity around location-data in general, and even more so around distracted driving data. Given the illegality of distracted driving, as long as we’re transparent with consumers around how we’re using their data, both regulators and consumers alike are mostly onboard. Again, we’re all aiming for the same outcome – making transportation smarter, safer, and more efficient for everyone.

BS: Does Apple Play and Android Car impact the data findings? It seems like it’s trading one distraction for another – instead of manipulating my phone, I’m using the computer in my car.

GH: We believe that it will. Currently, our first models are focused directly on how drivers handle and use the phone and less so on the other elements of driving that can be a distraction, but we’ll get there. We first wanted to provide insurance companies with actionable insights to go to market quickly, so we’ve prioritized phone handling, but again, this is just the beginning, and we’ve already come so far. The industry initially started with about who you are and eventually credit data. Then we started to build models on what you do, beginning with identifying correlations in actions such as hard braking, acceleration, and speeding. With those variables, we can add in things like road types, weather, and more. The phone is yet another layer of data that we have proven to increase pricing accuracy. What it comes down to is having billions of miles of data and the actual loss correlated to that data to fully understand and derive meaning from its contents – with that as a basis we will continue to find new predictive variables and the models will get better.

BS: You brought up loss data, and the only way to truly get the full picture is to tie driving data to claims – this is something that you’ve been able to do. Everyone in the room is asking the same question, why would Allstate create Arity, a subsidiary that takes their giant advantage of having claims and all the driving data, for others to benefit?

GH: This is probably one of the things we get asked most, and there are many folks even inside our own Corporation that initially think it’s a crazy idea. However, co-opetition is nothing new for how Allstate engages the industry – Answer Financial has operated as a separate company, like Arity since 2011, serving over 30 leading insurance companies.

In the instance of Arity, Allstate recognized how emerging trends changing transportation – declining car ownership, the sharing economy, ubiquitous connectivity, and autonomous vehicles – would dramatically impact the auto insurance business, the most significant part of Allstate’s business. Over the past decade, The Allstate Corporation has made significant investments in telematics and data analytics, with Allstate Insurance becoming the first insurance company to market a mobile telematics app in 2013, and one of the first insurance companies to enter the connected car business. They learned first-hand how telematics could successfully evolve their business through the changing landscape and that others would eventually jump into telematics as well. So in 2016, the Corporation made the very conscious decision to separate its telematics investment into the creation of Arity – a separate company and wholly-owned subsidiary.

We understand there is a perception that working with Arity means extending your information to Allstate Insurance, that you’d be “sharing your data with a major competitor,” but really, it’s the opposite. We’re leveraging models and claims data that originated within Allstate for the benefit of the industry, to create solutions for customers. Like any other data company, Arity’s platform is entirely independent of Allstate Insurance, and we do not share specific customer data with anyone, period. Ultimately, co-opetition will allow for network effects to benefit us all individually, but more importantly, the industry as a whole.

Check back for Part II of the conversation.