Telematics, UBI, and driver education
Nate Bryer, Allstate’s usage-based insurance (UBI) general manager, talks to Andrew Tolve about why educating drivers is key to the success of insurance telematics
All good drivers are alike; each bad driver is bad in his or her own way. So Leo Tolstoy might have mused had cars been invented back in 19th-century Russia. After all, among the legions of bad drivers on the road today, some swerve, some speed, some shave or text at the wheel. Others hammer on their breaks or tail cars so closely they can read the text on the slowpokes’ dashboard display.
And yet, despite this array of egregious behavior, it’s worth noting that most bad drivers have one thing in common: the conviction that they’re good drivers.
As Nate Bryer, usage-based insurance (UBI) general manager at Allstate, points out,“The concept of what safe driving is in someone’s mind and [the facts] it is based on are two different things. Just because you haven’t gotten into an accident in the last 10 years doesn’t mean you are a safe driver; it means you haven’t got in an accident.”
Education is key
The discrepancy presents a challenge for UBI offerings, which reward drivers for good driving (based on the facts) with lower premiums. After two years in the field with Allstate’s UBI offering Drive Wise, Bryer has more than a few tales to share about asking rooms full of people to raise their hands if they think they’re good drivers.
Inevitably, all the hands go up.
Allstate’s biggest take away from its first two years in the market is that “education is key” so that insurers can strip down misconceptions and set up drivers to succeed.
“UBI is a fairly new concept compared to other insurance products,” Bryer says. “It’s a matter of getting the general consumer up to speed on what [safe driving] really means.” (For more on UBI and consumers, see Consumers and UBI: The power of value-added services and Telematics and UBI: How to increase consumer acceptance.)
Explaining the metrics
Educating consumers about UBI offerings starts with the metrics. All UBI offerings are built around technologies that pull data from a vehicle, thus illuminating driving patterns and risk. The basic buckets that this data falls into include mileage, breaking, speed, and time of day on the road. While these may seem intuitive to those within the industry, real-world experience suggests that some explanation is necessary for customers.
“Staying one foot away from someone’s bumper in bumper-to-bumper traffic may be normal but it’s also risky,” says Bryer. “It’s almost like you have to change people’s thought patterns.”
When it comes to speed, customers need to understand that the faster they go, the less time they have to react to unexpected changes on the road, therefore increasing their risk profile. Likewise, if they’re incessantly slamming on their breaks, it suggests that they’re driving close to other vehicles, accelerating more than they should be, and rapidly halting to avoid risky situations.
Mileage and time of day—two of the most important UBI metrics—are more subtle. After all, many good drivers pride themselves on the number of miles they log each year. But simple math dictates that the more you’re on the road, the more chances you have of getting into an accident. A similar logic applies to time of day.
Bryer recalls one customer asking him, “’Why are you dinging me for driving late at night? There’s hardly anyone on the road.’” Bryer had to explain that driving late at night is actually the riskiest time to drive due to the frequency and severity of accidents during the late night and early morning hours, which numerous highway studies and reports support. People are tired. Some have been drinking or out partying.
“If you’re driving at that hour, even if you are a safe driver, you’re on the road,” says Bryer.”
Train the trainers
Once UBI offerings are big enough, companies may choose to deliver these lessons by way of media and marketing. To date, Allstate has focused on educating customers primarily through the agent channel. “Our agents are our voice,” Bryer says, noting the importance of creating detailed education materials in various formats—print, digital, potentially multi-media.
“We need to learn how they want to learn,” Bryer continues. “Once they’re fully immersed and understand the program, they’re able to be advocates and educators of customers and potential customers.”
One key to convey, Bryer adds, is that there’s no judgment factor when it comes to UBI: “We’re not saying you’re a bad person or a bad driver, we’re simply giving you a rating factor based on specific driving behavior. This behavior is riskier than that one. You can choose, but with one you’ll pay a higher rate.” (For stories on driver distraction, see DOT’s distraction guidelines as challenge and opportunity, What DOT’s new distraction guidelines mean for telematics, and Distraction guidelines as a telematics business opportunity.)
Even within the two years that Drive Wise has been active, Allstate has started to see the impact of UBI, not just the technology working on the ground but the customers learning and changing their behavior in response.
“What’s exciting to me is when people get it,” says Bryer. “When customers get the connection between their actual driving and the price they’re paying, and they can make changes to determine the price they pay, you get to see the light bulb go off.” (Click here to hear a podcast with Nate Bryer.)
Andrew Tolve is a regular contributor to TU.
For more on insurance telematics, see Special report: Insurance telematics.
For exclusive insurance telematics business analysis and insight, read TU’s Smart Vehicle Technology: The Future of Insurance Telematics report.