As early signs of returning to normalcy at long last come into view thanks to vaccines, there’s another unseen, but just as worrisome epidemic on the rise this year: distracted driving. Fifty-seven percent of all collisions now involve at least one instance of phone use – and one-fifth of all crashes involve phone use five seconds prior to impact.
This new epidemic of distraction has made every mile driven more dangerous for drivers – and more costly and unpredictable for auto insurers. Tragically, it also led to a sharp increase in fatalities: an eight percent spike in deaths from crashes on the road over 2019. But there is a cure. Insurers have grappled with the most effective uses for the new technology and data capabilities we have in our toolbox, and now is the time for providers to embrace data and insurtech. In doing so, insurers can not only better predict risk, but actually play a preventative role in making the road a safer place for everyone.
Every minute spent on the road is now riskier
From Covid anxiety, to civil unrest, to GameStop shorts, more and more people are plugged into devices to see the latest news – or get away from it. Either way, as a result of the pandemic and our increased reliance on technology, we’ve become more addicted to our smartphones than ever before.
Even as vaccines offer hope of re-opening the country this summer, that addiction is now playing out in more insidious ways behind the wheel. In fact, despite fewer vehicles on the road, people are driving faster and more recklessly than ever before.
In 2020, as cities and regions bounced betweens lockdowns and re-opening, driving patterns behind the wheel shifted. As cars cleared from the streets during lockdowns, drivers developed a slew of new bad habits, from increased speeding, to increased hard braking and far more phone use – most likely as a reaction to less traffic. However, as traffic flows return amidst re-openings, those new driving behaviors did not subside, contributing to a dramatic increase in risk for drivers each minute and mile they’re now behind the wheel.
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Auto insurers hold the cure to distracting driving
In medicine, doctors say prevention is the best cure. In many ways, auto insurers now hold the prescription to making drivers and roads safer and ending the distracted driving pandemic – if they’re willing to adapt.
By embracing insurtech, insurance providers today can play a more proactive role in accident prevention. Instead of reacting to incidents, auto insurers can promote and reward good driving habits, which can be incentivized by discounts and rewards. Though some are already doing it, adoption has been limited by logistical issues around hardware-based solutions (such as onboard technology) or poor user experience, leading to frustration and poor customer retention among drivers. To overcome these challenges, insurers can both partner with automotive companies at the point of purchase, and leverage new technology and vast data networks to build driving safety more seamlessly into their existing ecosystem of services.
Broad data capabilities and AI-powered smartphone telematics are being used to provide drivers with behavior feedback, in real-time, via mobile notifications. These can be tied to discounts and rewards, or even transform safe driving into a gamified experience via family leaderboards and personalized behavioral notifications. More than simply driving performance updates, these capabilities can also notify families and alert dispatch for help right away, automatically, when an accident does occur. Insurance technology has the power to elevate insurers into a role they’ve never played before – that of playing a proactive part in keeping consumers safe.
While keeping drivers safe, and even saving lives, is the most urgent need for insurtech – doing the right thing is also good for insurers’ business. By embracing new capabilities, auto insurers can build a more fair, sustainable insurance model that benefits both themselves and customers alike.
Insurance has been the fourth most impacted market by Covid-19 (trailing only hotels and leisure, banks and energy) as insurers have been forced to deal with very low interest rates and calls for refunds from consumers. If insurers do not invest in improving underwriting performance and risk assessment in this current environment, they may face poor overall business performance. The need to modernize and build up business resiliency by embracing more usage-based models is more urgent than ever.
However, today, poor execution of these programs is doing more harm than good. The future demands data accuracy and proven go-to-market insurance strategies and models – both to ensure the success of these programs, and to usher in a new wave of safer driving services at a time when distracted driving is more prevalent than ever.
The answers to ending the growing distracted driving epidemic and building more accurate, fair insurance models that attract and retain customers are one and the same. Insurers have a unique opportunity to reimagine their offerings to play a more preventative role in driver safety, while also improving their underwriting and risk assessment capabilities. It’s imperative that they take that opportunity to transform what insurance can be for a post-pandemic future.
Source: Digital Insurance
