Auto Insurance, Driving Safely and Saving Money
The first question I get asked by people when they learn that a research study using Posit Science’s useful field of view technology showed improving your brain can reduce at-fault crash risk by 50%is, “Will my insurance company give me a discount if I use the software?” I tell them that there is one insurance company today rewards you for completing the DriveSharp experience, The Hartford.
The next question is, “How come my insurance company won’t give me a discount?” The answer is both complicated and simple … the simple answer is becuase insurance carriers have specified discounts in their policies and cognitive training is not among that list
The more complicated answer is that insurance companies assess risk of drivers based on large amounts of data collected to measure the relationship between certain characteristics of a driver and the impact of those characteristics on risk. Key factors in determining the price of an insurance policy are your credit score, your driving record, your age, your gender, the number of years you’ve been insured, where you live and the type of car you drive (and to make matters more complicated some states don’t allow carriers to use some of these characteristics. For example, California restricts how credit score can be used to underwrite and price auto insurance). Credit score (called insurance score by many in the industry) may seem like an odd choice among the others but a number of studies have shown that credit score is correlated with auto insurance claims. Here’s a link to a research paper showing the correlation between insurance score and claims.
Discounts are then applied on this price partially based on facts and partially based on marketing need, e.g., a good driver discount is both a way to reward a lower risk driver but is also a way to encourage you to stay (or switch) insurance companies.
The aging baby boomer population creates a win-win opportunity for consumers and insurance carriers. These consumers want to continue to drive safely as they age and they would like to pay a fair price for insurance coverage. Insurance carriers would like to acquire and retain this 79 million person cohort and keep losses at a minimum. The ability of boomers to improve the risk profile by increasing brain performance meets both groups objectives. It will take a mindset shift for insurance carriers to believe a consumer can significantly change their risk profile and then implement programs to get this capability out to their policyholders.
I do want to recognize the initial steps toward this better and safer future. Kudos to Allstate who was the first carrier to test this, The Hartford who rolled out it out to their AARP insurance program, AAA auto clubs for bringing the message to their membership and to State Farm who is in the process of testing this in Alabama.
It will be great when carriers provide access to DriveSharp to increase driving safety and longevity for their policyholders and reduce the cost of insurance for the carrier and their customers.