What can auto insurers and TSPs learn from society's willingness to implement COVID-19 measures?
Updated: Apr 1, 2020
As I am stuck at home being socially responsible, I have been trying hard to find even the faintest of silver linings in the very difficult situation we find ourselves in with the spread of COVID-19. So, here goes…
Most Americans have made significant lifestyle changes to keep themselves and others safe. In the past people who washed their hands continuously and wiped down surfaces on planes would have been labeled as germophobes; today, we applaud that behavior as socially responsible. It is amazing how quickly society has changed behaviors to help fight this pandemic. Medical experts are already suggesting that any of these habits that become engrained could help save lives from other contagious diseases in the future.
Over the past 10 years I have spent a significant amount of time working on auto telematics products in the US and abroad. I have been generally pleased with the progress personal lines auto insurers have made leveraging actual driving data for risk assessment. Using how, how much, when and where a vehicle is operated is a more accurate and fairer way to determine premiums than relying solely on traditional variables (e.g., credit score, garage location, gender and marital status).
Last year US traffic-related accidents accounted for nearly 40,000 fatalities (https://www.nsc.org/road-safety/safety-topics/fatality-estimates) and were the leading cause of death for people age 15-24 (https://www.verywellhealth.com/top-causes-of-death-for-ages-15-24-2223960). Despite the tremendous advances that have been made with respect to using telematics data to price more accurately, the industry really hasn’t made significant advancement with respect to changing driving behaviors.
If the COVID-19 crisis has taught us anything, it has taught us that Americans can and will change their behaviors to save lives. While it would be unrealistic to expect the same widespread change for driving behaviors as we have seen with COVID-19, the amount of change and sacrifice required to reduce accidents is significantly less. The drastic changes I have witnessed gives me hope that many people can and will make minor changes to engrained driving behaviors. It is up to the insurance industry to 1) identify the behaviors that cause accidents to happen, 2) provide drivers with easily consumable information and 3) given appropriate incentives for them to change.
I hope the insurance industry will take these lessons learned from COVID-19 and develop cutting-edge products and services to help improve societal driving behavior. Even a small change will save lives!
Those who know me will confirm that I am passionate about the potential of using telematics data to reduce the number of traffic accidents. I’d be happy to provide my expertise to any efforts to make effective and sustainable behavior modification programs a reality.