The Opportunity
Road safety continues to dominate as a non-natural cause of death. At the same time, car insurers continue to base their pricing decisions mainly on the history of accidents, car age, and tickets, as well as self-reported mileage. In the face of increasing average age of cars, as well as increasing repair costs, that strategy decreases insurance companies margins.
Yet before the self-driving cars populate our streets, augmented intelligence is capable of assisting the society by detecting bad and good driving behavior. Safe driving could be rewarded.
Solution
Driveway, a telematics software start-up founded in 2008, developed an application that allows measuring driving behavior1. A GPS-tracker allows to measures speed, acceleration, braking habits2, with all these data put in the location (speed limits, road quality, altitude) and time (weather, brightness) context. Additionally, the mobile application also analyzes distracted driving data such as texting (that is so proven to be a cause of many accidents). The software app analyzes each trip and provides a ranking of the driving behavior as well as suggestions on what could be improved.
There are two major uses of the data: individual car insurance pricing and selling of the insights generated from analyzing the data (such as identifying bottlenecks in the road structure, understanding the aggregated driver behavior in response to various factors, learning the patterns that lead to collisions etc.)
Effectiveness and Commercial Promise
Driveway shoots for the stars by creating a personal driver’s profile and offering insurance programs at a discount if the profile outperforms peers – a positive reinforcement. They also plan to sell aggregate driver’s behavioral information to insurance companies, so that they could offer better programs to different categories of drivers.
The company competes with the legacy insurers that offer customers to install GPS devices in their cars and provide behavior-based pricing based on tracked GPS data (23% insurers launched usage-based insurance programs, but only 8.5% customers opted in as of 20143), as well as independent telematics firms such as Root, Drivefactor, and others4.
Other parts of the ecosystems are the marketplaces where different companies can exchange their data to make all risk scoring models more robust: Verisk Telematics Data Exchange5, DriveAbility Marketplace.
Driveway uniqueness comes from its integration of the distracted driving sensors, proprietary algorithms, as well as making it cheaper and faster for customers to enroll (as no device has to be physically installed in the car). Essentially, Driveway uses smartphones as a source of sensors and transforms the data into unique insights through the proprietary algorithms.
Motor Vehicle Accidents are the leading cause of unnatural deaths. Hence, besides commercial potential, Driveway offers a great social benefit. a survey of drivers has shown that a turned on telematics device changes behavior: 56% of surveyed drivers who installed a telematics device reported changes towards safety in the way they drive3.
Unnatural causes of death:
Alterations and the untapped potential
More available data and combinations of sensors might increase the number of driving metrics. Having enough history and combining it with human-based evaluations, Driveway could evaluate how tired a driver is, whether he/she is intoxicated and/or overall just inexperienced. Furthermore, Driveway could expand a use of its software behind pricing car insurance. Potential applications could be cross-marketing, finding high-quality candidates for Uber/Lyft peak hours and routes.
It would also be useful to bundle Driveway with other products in order to minimize positive selection bias (i.e. only good drivers opting in for user-based insurance). While such bundling poses certain ethical and privacy challenges, one example that would be beneficial to both society and businesses is for people to provide their Driveway data in order to get a credit score.
The data can also be used for behavioral/social studies and offer unique insights into non-driving related fields.
Team members:
- Alexander Aksakov
- Roman Cherepakha
- Nargiz Sadigzade
- Yegor Samusenko
- Manuk Shirinyan
Sources:
- http://www.driveway.ai/news/
- https://www.towerswatson.com/en/Services/services/telematics?gclid=CL7N-9ru4NMCFUa2wAod3eIOZg
- http://www.insurancejournal.com/news/national/2015/11/18/389327.htm
- http://aitegroup.com/report/auto-insurance-telematics-vendor-overview
- http://www.verisk.com/downloads/telematics/data-exchange/commercial-auto/Verisk-Data-Exchange_Data-Value.pdf
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