The ability for safe drivers to share their actual on-the-road data with their insurance company and then be compensated in the form of lower auto premiums that reflect their conscientious cruising seems like a perfect arrangement.
This as two of the world’s largest automakers signed deals in the past week with LexisNexis Risk Solutions that will put that valuable data in the hands of decision makers at insurance companies.
The first announcement Thursday (Sept. 9) marked a new strategic agreement with Ford Motor Company. It was followed by an agreement with Kia America Monday (Sept. 13).
“Telematics OnDemand allows insurers to price risk more accurately earlier in the process with the consumer, and consumers receive a price that best aligns to their driving behavior without having to go through a monitoring period [so] both parties benefit at point of quote,” said LexisNexis Risk Solution Vice President and General Manager of U.S. Connected Car Adam Hudson in a statement.
Growing Connectivity and Adoption
The two carmakers join an existing list of U.S. automakers already participating in the telematics information exchange, including General Motors, Nissan North America and Mitsubishi Motors North America, which in 2017 became the first auto manufacturer to begin working with LexisNexis Risk Solutions to connect its vehicles directly to the exchange, according to an announcement.
With its new pact, Ford and Lincoln customers with an eligible vehicle can opt in to participate in usage-based insurance (UBI) programs. This provides consumers the opportunity to save money by receiving more personalized insurance offerings and enables insurers to more accurately segment risk.
For its part, Kia America will supply vehicle build data to LexisNexis to deepen the knowledge held within a car or truck’s advanced driver assistance systems (ADAS) that can be used to calculate a more accurate premium when consumers shop for auto insurance.
By normalizing and standardizing vehicle build data, LexisNexis Risk Solutions is enabling U.S. insurance carriers to access and integrate specific details about ADAS features at the point of quote more easily.
For example, when a Kia customer shops for auto insurance, the provider can factor in the ADAS features on their car and potentially offer a lower premium.
Personalized Insurance
LexisNexis said when automakers work with it to reduce complexity and friction when it comes to data, they can offer a more seamless integration of their customers’ driving and vehicle data into insurance carrier workflows and help their customers save money.
LexisNexis said it works with 95 of the top 100 U.S. auto insurers.
Ford Motor Company entered into a similar agreement with mobility data and analytics company Arity in February, according to a press release.
Ford Motor Company Director of Business Operations and Enterprise Connectivity Alex Purdy at the time, “We continue to invest in embedded vehicle connectivity to help our customers get as much value from their vehicles as possible.”
Purdy added that Arity makes that possible by enabling insurers to offer customers more personalized insurance based on how, when and how often they drive.
Making the Customer Happy
Customers who drove fewer miles during the pandemic-driven lockdowns have taken notice.
Total U.S. driving fell by 13.2% in 2020 and was the lowest in two decades, according to a Federal Highway Administration (FHWA) press release. It noted that the drop in vehicle miles traveled was thought to be due to the nationwide closures of businesses and schools and other economic factors related to the pandemic.
Jeff Dunsavage, senior research analyst at the Insurance Information Institute, wrote in a blog post, “Drivers seem to have become more comfortable in the past year with the idea of giving up their data to help insurers more accurately price their coverage.”
PYMNTS reported in August that customers are asking for more flexible car insurance policies that pay for their experience and use since realizing during the pandemic that they were paying for coverage based on a flat mileage number they weren’t using since they were driving less.
Read more: Embedded Insurance Offers Don’t Repel Customers, They Attract Them
In an interview, Dave Brune, president of the Americas at global insurance technology company Cover Genius, told PYMNTS that the availability of data makes it easier for insurance companies to offer that flexibility.
“There are ways [to price it properly so that you don’t get burned, if] you’re targeting the most profitable segments [discovered through] data analysis,” he said. “On top of that, you’re making the customer very happy because [they’re] paying for what they [want and] need.”
As much as the good drivers of the world stand to benefit from the driving data uploads, those that tend to exceed the speed limit would be unlikely to hand over their info to insurance companies.
