Putting customers in the driver seat of their insurance costs

This past Memorial Day weekend, I enjoyed some lively conversation while BBQing with friends and neighbors. Of course, one of the livelier topics of conversation happened to be around none other than auto insurance. My neighbor, a safe driver with a newborn baby and an especially keen awareness that he’s driving much less than ever before, was questioning if he’s paying too much for his car insurance.

He asked me why he’s paying so much when he has never filed a claim or even gotten a ticket. With a perfect driving record, he brings up a great point: why should the best drivers pay more to compensate for the worst?

In a recent study Arity conducted, 48% of adults indicated that “price” is the most important reason for selecting their auto insurance provider and these same participants identified “driving records” and “driving behaviors” as factors that should be most important for pricing auto insurance.

With claims costs rising for insurers, partly due to the damage accidents cause to more sophisticated car technologies, a continued top priority for carriers is to provide customers with insurance prices they can afford, without sacrificing growth and profitability of the business. While traditional measures of risk, like credit score and demographics, are still being used in insurance pricing, insurers are turning to telematics to acquire and retain the best drivers – and promoting safe driving through incentives, like sign-up and renewal discounts.

Top- 50 auto insurance provider, Farm Bureau of Michigan, is capitalizing on these opportunities by partnering with Arity for technology and data analytics insights. The provider launched its “FB Drives Michigan!” mobile-based telematics program in May 2021, in Michigan. The program was introduced with an immediate 15% auto premium discount when enrolling in an annual term policy and a 12% discount for six-month terms. Customers also can earn an additional discount at renewal.

“We are always looking for ways to benefit Michigan drivers while encouraging a safer environment for everyone on the road,” said Farm Bureau Insurance of Michigan CEO, Don Simon. “FB Drives Michigan! is exciting in the way that it utilizes technology to connect our customers with an insightful and interactive experience. This opens up a multitude of benefits ranging from customer service advancements to, of course, safe driving discounts.”

To leap ahead of a typical telematics-launch timeframe, Farm Bureau of Michigan tapped Arity for its turnkey safe-driving app, Routely, which allows for a quick telematics program launch and includes simple customizations to tailor the brand experience. It’s also critical for insurers to score their drivers with confidence by tapping into credible driving behavior data that predicts insurance losses. Fueled by billions of miles of driving data tied to associated claims costs, Farm Bureau of Michigan leverages the Arity driving score, Drivesight. Using Arity’s actuarially justified and regulatory approved score saves insurers the long wait to collect this loss experience data themselves – and allows the insurer to have confidence in the scores their customers receive.

For years, insurers have been using telematics to better price auto policies, but Arity’s advanced solutions offer even more sophisticated measures of risk, leveraging vast amounts of loss experience data and already- collected, nuanced distracted driving behavior.

At Arity, it’s been so rewarding to see more and more insurers offer telematics programs like Farm Bureau of Michigan. My answer to my neighbor: does your insurance company have a telematics offering? If not, maybe you should switch to one that does.