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  • Writer's pictureG Werner

Driving Wellness

By Bill Costa and Geoff Werner


Millions of people use fitness watches and apps.   Friends, family, and co-workers regularly compare progress asking “Have you gotten in your 10,000 steps today?”  People either already know the answer or quickly find it on their phone or watch.  The message is simple:  meet your Step Goal to be healthier.  Wellness programs are capitalizing on this fitness phenomena. 


Employer health insurance programs subsidize fitness watches, offer wellness coaching, pay for gym memberships, and give financial incentives to encourage people to get healthy.  Why do they do it?    These programs are common sense, win-win arrangements.   The employee receives financial incentives and health benefits; the employer has healthier employees with fewer missed workdays; and the insurer lowers their costs.   At a time when consumers are unhappy about escalating health care costs, the health insurers are proactively pursuing innovative solutions that consumers value.  Kudos to them!


Let’s turn to automobile insurance.  The primary safety focus has centered around manufacturers improving safety features and laws targeting unsafe driving practices. While those are important initiatives, the number of US traffic fatalities still increased from 33K to 43K between 2013 and 2022 (i.e., a 30% increase). Even if all new cars were “crash-proof”, it would take years to eliminate all crashes given that most vehicles on the road are over 10 years old.  If we want an immediate impact, we need to focus on the drivers.  Rather than just punishing bad behaviors through laws, auto insurers should emulate health insurers and positively promote safe driving (i.e., “Driving Wellness”).  This will not only save lives, but also reduce premiums during a time when they are skyrocketing.  


Sponsoring driver training programs is a reasonable first version of Driving Wellness.  Like most actuaries, we have seen data that casts doubts on the efficacy of some of these programs.  We aren’t talking about the programs that are designed more for ticket forgiveness rather than true driver improvement.  Instead, we mean true educational programs—like Adept Driver’s—that effectively address the critical driving, behavioral and neurocognitive factors that cause accidents.  Adept Driver’s brand is built on their scientific foundation, and their online courses leverage traffic simulations to teach safe driving behaviors.  Insurance company data confirms the accident reduction from their courses is large enough to profitably fund the class and give the consumer a sizable discount.  Auto insurers could implement this version of a Driving Wellness program today and immediately begin saving lives.


What about a Fitbit for driving?  There has been a proliferation of insurance products using driving data from connected cars or aftermarket sensor solutions.  Unfortunately, insurers treat the driving data more like an insurance credit score (i.e., a rating variable to adjust premium) than an effective coaching tool.  These programs typically include driving dashboards with the promise of premium discounts to incent safer driving.  Is the potential of a future policy discount really enticing enough to change the behavior?  How many teen drivers are going to be motivated to drive more safely just so their parents will get a good insurance discount?    While it is a good start, the focus needs to change from simply rewarding good drivers to making unsafe drivers safer.


On the positive side, a few US insurers are trying to motivate safer driving by leveraging driver-based rewards.  What did we find when we tried one of them?  First, the app provides a singular driving score supported by an overload of data with six trend graphs, a page of badges, 10 streak challenges, and targeted driving tips.  If two actuaries found the data to be excessive and hard to synthesize, imagine the reaction of a “normal” consumer.  Second, the driving tips are too generic to help the user understand exactly what to correct.  We are reminded of Geoff’s father’s reaction to Allstate’s tip for him to reduce harsh braking.  He reduced his harsh brakes by “blowing through” yellow lights.  While he earned a better discount, he clearly wasn’t a safer driver.  Third, the user can earn badges for completed trips free of specified risky behaviors (e.g., driving distracted).  The safest trip is the one that you don’t take, so why wasn’t there a badge for the “Mileage Miser”.  Finally, a user can earn a $5 reward every two weeks.  In other words, if you drive well, you can almost afford to buy a fast-food meal by the end of the month.  Doesn’t seem like that is enough of an incentive to encourage most people to drive less aggressively.


Our overall conclusions were that the app generates a mountain of data that is difficult to interpret, lacks effective coaching to motivate behavior modification, may have the unintended consequence of increasing risk, and provides very limited incentives compared to the potential reduction in losses.  Despite our criticisms, we applaud the insurer for trying something different!  We hope this is just that company’s minimally viable product on the road to a truly great Driving Wellness program.


A successful Driving Wellness program must do three things well:  1) identify behaviors that cause accidents, 2) deliver clear targeted coaching, and 3) provide meaningful incentives to change.  Discovery Insurance’s Vitality program, in South Africa, seems to be one of the most advanced programs we have seen.  Discovery diverged from traditional auto insurance and invested in behavioral economics to incentivize their insureds to reduce risk and achieved noteworthy results.  We believe an insurer, telematics service provider, and driver training company could collaborate to build something even better for the US market.  


For those who use regulation as an excuse not to innovate…most states have adopted the NAIC recommendations enabling Driving Wellness programs.  Regulators in the “other” states will almost certainly work with insurers seeking to sponsor Driving Wellness programs.  After all, which regulator will prevent free programs that result in lower premiums, safer drivers, and safer roads?


So, no more excuses, we can innovate immediately to create a true win/win/win for auto insurance.  Insurers will lower their accident costs; consumers will be safer and pay less for insurance; and society will benefit from safer roads with fewer traffic accidents and fatalities.  Let’s get going!


Geoff Werner and Bill Costa are driving data experts, insurance innovators, actuaries, and parents who suffered through teaching multiple teen drivers how to drive.

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