Advanced Risk provides auto insurers powerful new variables for propriety segmentation
Cambridge Mobile Telematics (CMT), the world’s largest telematics service provider, today announced Advanced Risk, a groundbreaking risk segmentation solution that delivers next-generation telematics variables. Auto insurers use Advanced Risk to derive proprietary insights from customer driving behavior. With Advanced Risk, insurers can analyze and measure driver risk using innovative new variables like Contextual Speed, Advanced Distraction, Compound Events, and more.
“Auto insurers know that driving data is the new competitive advantage. Every top insurer in the US has a telematics program today that utilizes variables like harsh braking and phone distraction to assess a driver’s risk and develop customized pricing algorithms. Carriers refine their pricing algorithms over countless iterations by investigating and incorporating new variables to match rate to risk,” said Lakshmi Shalini, VP of Risk & Insurance Analytics for CMT. “With Advanced Risk, carriers have access to new driving data and analytics to refine their custom scores and sustain a competitive advantage in a rapidly evolving marketplace.”
Advanced Risk gives auto insurers powerful new variables like Contextual Speed, Advanced Distraction Variables, and Compound Events:
Contextual Speed: Contextual Speed, which CMT has patented, measures a driver’s speed compared to historic speeds on a road segment. Speed distribution metrics for road segments are dynamically updated based on driver speeds across the CMT DriveWell® platform.
Advanced Distraction Variables: Advanced Risk offers multiple dimensions of distraction, beyond phone motion and handheld and hands-free phone calls. For example, the Context Switching variable identifies distraction-induced acceleration and braking events.
Compound Events: Advanced Risk includes new variables of overlapping events that generate the most value in a predictive risk model. Multiple combinations of risky events are available for carriers to test and analyze out of the box.
Even with dedicated data scientists, actuaries, and product leaders, it would take a leading carrier years to develop advanced risk variables on their own. To build advanced risk variables, a carrier needs to collect billions of miles of telematics data, extract and engineer variables from raw sensor data to compute the riskiest events, and then evaluate the predictive lift on claims. With CMT’s Advanced Risk, carriers only need to analyze the predictive power of the new variables on their book of business to create a new proprietary score.
Advanced Risk variables offer significant segmentation lift over existing telematics variables. While precise lift improvements will vary carrier to carrier, context-based risk variables can generate incremental lift of over 15% alone. With over 50 risk variables available today, Advanced Risk can deliver even more incremental lift for carriers.
Advanced Risk also provides new benefits for consumers. With more granular risk segmentation and fine-tuned pricing models, carriers can address more segments of the market while providing pin-pointed behavioral feedback to their policyholders. With more insurers competing for their business, consumers will have a wider variety of prices and coverage ranges to choose from when shopping.