Insurance Shifts Gears for Connected, Automated Driving

Auto insurance may be in for big changes caused by more automated cars and more connected drivers.

A new survey by J.D. Power finds more than one third of all consumers would switch insurance carriers to get a discount for having driver assistance features in their cars. And on May 30, Allstate teamed up with a startup to enhance safety and offer discounts using data collected through a mobile app.

Increasingly automated cars are raising questions about liability and risk even as telematics, from both smartphones and onboard devices, are starting to give insurance companies more insight into how policyholders drive and sometimes allow for lower premiums.

Many consumers are interested in automated cars, both for greater safety (cited by 26% of respondents to the J.D. Power survey) and less driving stress (24%). But 15% are also hoping for lower insurance premiums.

If their insurer doesn’t give them a break for buying cars with advanced driver assistance features, 40% said they definitely or probably would switch to one that did, Power said.

Overall, the survey showed 22% of consumers are likely to consider buying a “highly automated” car.

But while new technology may make drivers safer, it can also distract them from the task at hand — even though cars aren’t yet automated enough to completely take over. Is partial automation raising or lowering the risk of accidents?

“Insurers are still trying to figure that out,” Robert Lajdziak, an insurance business consultant at J.D. Power, told The Connected Car. Manufacturers are ahead of insurance companies on that score, acting to mitigate the risk of distraction by adding features like hand-on-the-wheel sensors and cameras that watch drivers’ eyes, he said.

New MIT research suggests the problem is real. Using years’ worth of trip data from telematics company Agero, researchers found that drivers manipulated their phones just over 10% of the time while using cruise control. That was 22% more than drivers who weren’t using cruise control.

The youngest drivers in the data set, those aged 17-22, manipulated their phones most often — about 12% of the time, the researchers said. From there, it was a fairly steady decline to 3% of the time for drivers aged 87 to 92.

Those findings mostly represent first-generation cruise control that simply keeps a car at a given cruising speed, rather than adaptive systems that automatically maintain a certain distance from the car ahead, MIT scientist Bryan Reimer told The Connected Car. He and his colleagues, along with automakers and other partners, are now studying the effects of more advanced automation features such as Tesla’s Autopilot.

“We don’t even understand enough about how Level 0 automation is impacting behavior, let alone how higher forms of automation may be contributing to the problem,” Reimer said.

Allstate’s partnership with Life360, a location and driving safety startup, may help to give consumers an idea of how well family members drive, including whether they’re using their phones. Life360, which helps families locate each other and chat with each other as well as monitor driving, collects more than 5 billion hours of driving data per month.

The companies plan to combine that information with driver behavior models developed by Arity, a company Allstate founded in 2016 to turn transportation data into actionable insights. The result will be insights about each family member’s driving and personalized auto insurance offers, they say.

The idea is to help parents coach their children to be safer drivers while rewarding safe driving. Allstate says that with Life360’s volume of data, it can outpace other usage-based insurance offerings.

— Stephen Lawson is a freelance writer based in San Francisco. Follow him on Twitter @sdlawsonmedia.

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