The Perfect Insurance Mobile App

Benefits compared to Current State of the Smart Mobile Applications

Insurance companies already know that smartphone apps, email, and online chat lead to higher customer satisfaction. The rising popularity of smartphones has also led many insurance companies to build versions of their websites optimized for mobile browsers and to offer dedicated “apps” that allow users to get quotes, submit claims, and manage their policies. Mobile apps for usage-based insurance (UBI) add another element to a market that has relied on small devices plugged into onboard diagnostic ports. Smartphones have the capability of connecting tens of millions of drivers to UBI services. Insurance companies are unveiling mobile apps that gauge driving behavior through smartphones to set insurance discounts for motorists and fleets. There is huge momentum and excitement around the use of smartphones as enablers of information flow to be used in UBI and risk identification. The value of the smartphone, of course, is that virtually everyone has one, incremental air time to transmit data is trivial, meaning potential "free" resource used to improve insurance risk prediction, and thus the total cost is a fraction of previous UBI programs. Usage-based insurance programs that rely on data from smartphones will be the rule rather than the exception in the not so distant future. The challenge is two-fold, first to get accurate data that replicates the same readings from a plug-in device with the smart phone and secondly, to integrate the data to yield the most accurate predictor or driver risk. It's a fairly tricky technical challenge. Future apps will also be able to focus on improving driver performance in an effort to continually improve safety, reduce risk, and therefore reduce costs associated with accidents from the driver’s smart phone and all this with superior accuracy. Currently insurance companies have two options for gathering data for usage -based insurance (UBI). Most personal lines insurance companies are using a plug-in OBD device, but are increasingly moving to a smart phone based solution. The plug in solution currently offers superior data collection quality for the most accurate underwriting. The downside of the plug in device is obviously the cost of the program and the inconvenience to the user. The current smart phone apps have a much lower cost structure and easier distribution mechanism; however, the current data stream is rather poor compared to the plug in device. Most current smart phone apps are not collecting accelerometer data off the cell phone. The ideal app would use all the sensors available for data collection including: GPS, Accelerometer Data, Gyro, and Heading. Many telematics systems are using speed to derive acceleration events by taking the second by second speed delta as an approximation for acceleration. Usually GPS spe ed is used as the speed input. The key to success is that the speed information is accurate both in mph and in time. If either is slightly off, significant errors can occur. Problems with existing mobile apps is that most of the data is derived directly from the GPS feed. Challenges arrive in urban canyons, forests and tunnels where GPS signal erodes or disappears all together. Significant errors will occur on the speed data. Additionally, only using GPS to determine trip start and end requires the smart phone to frequently run the GPS to determine if a trip has begun. This causes significant battery drain, so the typical application will only be able to sample the GPS every few minutes and hence often miss trip starts. A lot of the data collection problems will go away when the smart phone apps collect accelerometer data off the phone and have persistent data collection.

What are the Requirements? Of the Ideal Insurance Mobile App?

Accurately Collect: Trip start and stop times; miles driven; time of day; meaningful driving

events; and data for driver behavior score. By leveraging the technology in the smartphone, the app would detect driving within moments of beginning. Setting the smartphone in motion triggers the Smart Phone accelerometer and the application starts recording the activity right away. When the activity ends, the app falls back in to hibernation.

Application specific accelerometer frequency and resolution - Allowing for detection of both rapid changes and slow behavior changes.

Low Battery Consumption - Typical use would consume under 8% of smartphone battery on a daily basis.

Automatic Passenger Trip Cancellation – If app is running on both the driver and the passenger phones, back-end will cancel trip gathered most likely by passenger.

Automatically filters for anomalous in-vehicle device movement (i.e.; driver moving it) and be able to generate viable accelerometer data even from a non-fixed mount phone.

Commercial – Ability to automatically assign trips to company account and personal account according to on-duty schedule.

Continuous driver behavior monitoring, not simply event-based data collection. Optional Behavior Based Coaching - Implement targeted driver improvement programs and

address issues quickly. Identify other patterns of poor driving, not just events.

Challenges of the Current Mobile UBI Apps

Although Insurers have reached huge milestones in terms of mobile UBI apps, customer reviews are a

good indicator of the challenges these pioneers face. Poor data collection from current smartphone

applications creates dissatisfied customers that are contacting Customer Support departments to file

complaints about miscalculated data that includes: inaccurate trips, mileage, and events, which also

adds to the overall cost burden. Additionally, underwriting efficiency suffers from the poor data.

Most Common Complaints

Online reviews have a consistent mixed theme - customers like the idea of the app, and think the concept is great and like the look and feel, but complain about accuracy, lost trips and battery drain.

“I like the concept of the app, but I don’t like the fact that when I am driving the app is constantly searching for my location draining the battery. I have never had to keep my phone constantly on the charger. It would be nice if it didn’t drain my battery.”

“Good look and design, but doesn’t record all of my trips so I am missing out on points. Sometimes it works but 9 out of 10 trips are not being recorded.”

“I really like the app. It’s a great idea to give incentives to make people drive safer. My only issue is that

the app crashes all the time. I’m lucky if I get my trip saved before it crashes.”

How Can It Be Used?

Telematics-based insurance can finally gain traction, because instead of requiring physical devices that

must be manually installed in a car, it can now be done through mobile -phone apps that are much easier

to download and install. Customers in every market are migrating to smartphone apps including

personal lines insurance, commercial insurance, and fleet management.

Who Will Benefit

Personal Lines – As a replacement for plug-in devices.

Commercial Lines – Paradigm shift for commercial underwriting because the driver behavior score can

be summarized to company level along with total miles driven and therefore contribute in the

underwriting process.

Fleet Level – Even without insurance participation, a fleet manager can use the app to monitor and

improve driver behavior at a very low cost.

Summary

Mobile devices and smartphone apps are leading-edge tools that most people own and are the key to

big scalability. As data collection using smart phone improves, insurers will be better able to align their

strategy with the smartphone as the primary data collection point making it the superior choice. The

most successful mobile UBI apps will be those that integrate multiple smartphone sensors, profile a

Drains Battery

Consumes too much data

Crashes often

Requires GPS all the time

Lost trips

driver’s risk to the most accurate possible level, and make the overall experience better for the

customer. Penetration will keep up with evolving technology as the road blocks are removed. Superior

science applied to more accurate prediction of risk would decrease accidents by identifying which

drivers are most likely to be in an at-fault accident. Superior technology applied to data collection via

smartphones would increase customer loyalty.

In interest of an expedient solution, companies were delivering deficient scoring of driver risk and

settling for good enough. With accurate data collection, the ideal app would have the ability to generate

traditional UBI information including trip start, trip end, miles and time of day. Furthermore, due to

highly accurate accelerometer data the app could also collect driver behavior throughout the trip in

continuous mode and evolve away from the simple event-based systems. A continuous monitoring

system would greatly improve the driver behavior assessment and hence risk assessment of each mile

driven. Up until now, we have not considered smartphones capable of generating the quality of

accelerometer data to do accurate scoring, but the future is here.