Insurers work to thwart distracted driving with UBI

Distracted driving is causing more motor vehicle crashes in the U.S. each year, prompting industry carriers to leverage their telematics and usage-based insurance programs to reduce the risky behavior and its resulting claims.

Arbella Insurance announced the launch of a safe-driving mobile app, Wheel Focused, aimed at bucking that trend. The application, launched in partnership with Cambridge Mobile Telematics, provides feedback to drivers based on five metrics: rapid acceleration, hard braking, sharp turns, speeding and active phone use. Arbella is already a customer of CMT for its DriveWell UBI app.

In addition, Good2Go Auto Insurance announced its own initiative addressing distracted driving behavior this week. Good2Go collaborated with insurtech LifeSaver in efforts to incentivize hands-free cellphone use while driving through premium discounts. In November, Nationwide selected TrueMotion to capture distracted driving data from members of its UBI program, SmartRide. Farmers Insurance also launched Signal, a new UBI program that reduces customers' discounts if they look at their phone while driving, last spring. On the technology front, Allstate's connected-car subsidiary Arity rolled out a capability for its telematics offering, helping carriers identify distracted driving leveraging both phone data and corresponding claims information from its parent company.

The National Highway Traffic Safety Administration estimates 660,000 drivers use electronic devices daily while operating a motor vehicle, resulting in a higher claims frequency for insurers. Advanced driver assistance technology, in the form of backup cameras, sensors and touchscreen controls, installed in the majority of newer vehicles also makes claims more expensive. As a result, the industry is expected to raise premiums across the board in 2018. The average cost of auto insurance will climb to $1,150 this year, up from $915 in 2015, according to data from the Insurance Information Institute, cited by USA Today.

“The last two years, we have seen personal lines underwriting results deteriorate, and insurers are scrambling to explain what’s happening,” said Donald Light, director of Celent’s North American Property & Casualty Insurance Practice. “Distracted driving is a factor that comes up in every conversation.”

Another element adding to the industry’s focus on distracted driving is the upgrade in vendor technology, Light notes. Service providers are now better equipped to track human behavior, not just car performance, than they were two years ago. The added attention on drivers could also have a positive impact on insurance companies’ willingness to promote individual UBI programs. Progressive and Allstate currently lead the pack in that category, Light says.

Ultimately, insurance companies will additionally start penalizing drivers for distracted driving as well, Light predicts. Coverage providers should also run into no trouble from a regulatory standpoint.

“As long as the data is there that explains a good driving or bad driving record, justifying higher or lower premiums, that’s what regulators look for,” Light concluded.