Motor Insurance Based on the Way You Drive

Drive well, Pay less!

Motor insurance based on the way you drive Airmax has been at the forefront of ‘Insurance Telematics’ from the start. Indeed the very concept of black box monitoring of driver behaviour scoring was patented by us in 2007: Patents granted to Airmax: Method and system for driver style monitoring and analysing

 GB2434346 – Pay How You Drive

 GB2470146 – Pay How You Drive (Div I)

 GB2470147 – Pay How You Drive (Div II)

 GB2461044 – Drive For What You Have Paid However Airmax has not actively entered the insurance telematics market as this business sector has not been seen as critical or strategic to Airmax’s business objectives. Airmax does offer enhanced driver reports for fleet managers and they are used as part of the duty of care objectives and driver monitoring and training. They are also extensively used by fleets in risk and accident management to administer their own internal portfolio as most of Airmax’s clients are self-insured.

What is needed is a Game Changer technology and to lower the human element from the human risk of driving. Airmax believes that this is not just reporting speed but controlling excessive speed. Airmax has always considered that distance or driver behaviour based reports, when used as a premium calculator, as more of a marketing initiative used by insurance brokers and insurance companies rather than a real and useful technology. It has its place, there is no doubt, but it is a monitoring technology and not a preventive one.

Surveys routinely find that around 80% of drivers think of themselves as being of “above average” ability; especially drivers under 25 years of age. Telematics insurance perhaps offers a USP to those insurers wishing to attract new and lucrative business and Airmax concedes that it can be a useful educational and awareness tool for young drivers.

Calculate Insurance Premiums To calculate insurance premiums underwriters have traditionally used crude demographic data such as:

 Where you live by Post or Zip code.

 The type of vehicle you drive: Insurers consider the make and model of your vehicle in terms of what the risk factors associated with it might be. For example, some makes and models fare better in collisions than others, meaning injury to the occupants and damage to the car end up being less severe. Also, newer, more expensive vehicles cost more to replace, so they are more expensive to insure. How you use your car: The more time a car spends on the road, the higher the chance of an accident. That means higher premiums if you drive a lot, you drive long distances or you drive to work every day.

 Your driving record: Your driving record has a big impact on the premiums you pay. For example, a long driving history with no accidents can help keep your premiums down, and every accident where you are at fault may push your premiums up. Speeding tickets and other violations may also increase your premiums.

 Your statistical group: Depending on where you live, your insurer may consider the claims history of the group to which you belong as a driver – for example, the group of drivers of the same age and in the same geographic location. If you belong to a group that is more likely to make claims, your premiums may be higher.

 You age and gender and business and private usage.

 Night driving.

Personal Data The above personal data is still collected by the insurer but as a variant of this fixed premium model an alternative is to monitor both the vehicle and the driver behaviour giving a personal profile and how it relates to risk. These days this may be by collecting data from ether an embedded or no embedded system. In the USA, the focus is on distance driven, or in Europe “pay-as-you-drive” has taken the analysis still further. Participating customers can be offered a discount ranging from 10% to 40% off a standard rate. Some also hail telematics as a way of improving driving standards, by making drivers more aware of when they are behaving dangerously. Black boxes can be made to beep when a vehicle brakes too heavily, for example. They can alert emergency services after a crash, too. It is not just drivers who are experiencing great benefits from telematics insurance. Insurers have a lot to gain by being able to load or relax their client’s premium based on how well that specific client drives. It allows the insurers to manage a cleaner book and select those drivers it is happy to insure. Underwriters also save a lot of money and time on investigations into accidents by doing business with good drivers and being able to ascertain blame with forensics by examining data from the onboard computers (ECUs). Insurance companies are exploring the potential of telematics devices to add intelligence to the premium creation process. However, whilst figures clearly indicate a strong link between driver behaviour and claims, insurance companies’ have yet to really embrace the technology fully.

Insurers appear to be blinded by too much data and so far have experienced mainly exceptions or KPI based telematics data. Too much time is spent trying to identify good and bad drivers, bench marking or creating league tables. Insurance companies are beginning to think that they should receive data every second that accurately represents individual driver behaviour and preferences.

There is evidence that this new type of insurance is also causing people to drive better by rewarding their good behaviour and punishing risky behaviour. It’s even possible for the driver to be alerted every time they are engaging in dangerous behaviour and by reporting KPI’s.

The placebo effect also encourages people to drive safely and lowers risk of an accident through live feedback. The idea is that you save money as you become a better driver.

Pay How You Drive Pay How You Drive insurance is new and based on the way you drive and not solely the usage of the car. It is designed to improve your driving habits by sending you direct feedback. It is ideal for drivers that have found it difficult to obtain insurance cover and parents and guardians concerned about their young drivers. It differs substantially from existing simple distance and time based schemes by also taking into account the actual way that the vehicle is being driven. In almost every aspect it is the fairest method yet devised for calculating motor insurance premiums as it allows you to modify your driving style and as a consequence reduce the accident risk level out on the road.

If you fall into one of the high risk groups, you’ll likely be looking at high premiums from your insurer. Telematics is especially good for those in high risk groups such as:

 young drivers

 inexperienced drivers

 less frequent drivers with a low annual mileage Driver league tables help and when combined with the carrot and stick approach to driver training can reap early rewards especially if competitive and peer pressure applies. The KPIs above show events by category. The example below not only allows the driver to compare their performance but is influenced by averaging data from others participating within the fleet.

Are there any other benefits? While the benefits will differ between providers, ‘pay how you drive’ technology can offer a number of benefits, including: Feedback on your driving technique and suggestions and incentives on how to improve it;  Tracking services to help locate your vehicle if it is stolen;  Emergency services notifications in the event of an accident;  Improved claims handling – ‘pay how you drive’ data can provide independent, objective evidence in the event of an accident, helping to assess liability for an accident quickly, and reducing the risk of honest motorists becoming victims of fraud. Game Changer Technology Airmax launches the next generation of driver technology - The next step on from driver monitoring and PAY HOW YOU DRIVE. Welcome to the world of Adaptive Speed Control.

UK based Airmax Group and USA Sturdy Corporation has jointly developed a new range of vehicle related telematics applications that will make the first step in autonomous driving. It is designed to mandate the performance of the vehicle and to link the top speed to the legal limit.

The technology adaptively controlling the vehicle’s speed, revs and acceleration rate to help reduce fuel, accidents and insurance costs. Applications range from simple top speed limiting and rev band management through to road speed sign adherence otherwise known as "Intelligent Speed Adaptation” (ISA) or Adaptive Speed Control. Airmax’s telematics system also records events and report the vehicles DTC’s (trouble codes) and a plethora of telematics applications. The combination of both technology subsets is very compelling and a powerful tool for those accountable and responsible for fleets.

What is needed is a proactive technology to reduce the risk of vehicle accidents but also save the cost of vehicle ownership.

This means looking to attain: 1. Lower overall maintenance cost per mile 2. Increase fuel economy and extended life of the vehicle - Proven to give up to 15% fuel savings 3. Saves lives and protects property by reducing speed related accidents 4. Reduction of fines and complaints of excessive speeding 5. Improved duty of care to employees 6. High speed is a key factor in car accidents. For many years, traffic calming and police surveillance have been the methods to reduce the speed of the cars. However, the development in Intelligent Transportation Systems (ITS) has led to the development of speed reducing systems. The Airmax telematics system establishes the position of the car with GPS, and the position is compared with a digital roadmap which contains the local speed limits. If the local speed limit is exceeded the system responds to a speed within the law.

The data is derived from proven maps sets from Nokia and the map database applications will sit both within the vehicle’s onboard unit and Airmax’s telematics hosted platform. These applications are seen as a game changer technology and will have a major impact on User Based Insurance (UBI) but also on dual fuel engine management. Gone are the days when PAYD or more latterly PHYD schemes was used as a risk tool to calculate insurance premiums. Now regardless or vehicle make or performance the Airmax unit will ensure that the vehicles will stick strictly to the legal speed limit.

Consumers are yet to experience autonomous driving assistance systems and may be wary. However this will change as the benefits are explained, experienced and valued.

There are several alternatives that could be offered:

1. Advisory – a simple device that tells the driver the speed limit and warns when exceeding it 2. Controlling – a hardwired embedded device so that it becomes impossible to exceed the speed limit 3. Discretionary – a half-way-house where you can switch between the controlling and advisory or even switch it off altogether 4. Override – features to ensure that the driver is always in control. This may take the form of a switch, pedal control or control screen. The event being recorded by the telematics system or instigated remotely 5. Immobilisation – setting the speed to zero 6. Idle Control – When the system is active and the vehicle has been idling for more than a minute, or if the driver has applied the handbrake, the unit will shut down the engine 7. Zoned – and only activates in Zones such as congestion charge areas 8. Towing Speed Limiting – Will reduce the maximum speed to the permitted limit for the vehicle / trailer combination. 9. Anti-theft and Hijack Facility – halts or slows the vehicle after a pre-defined time or remotely via Airmax’s telematics link 10. Driver specific management – links the vehicles performance to the drivers skill set using identification from RD ID tags

Airmax’s autonomous driving assistance systems have been achieved this by adding applications from the HERE™ data sets obtained by using API’s and scripts from Nokia. HERE Maps are based on the world-class NAVTEQ™ mapping data used in 90% of in-car navigation systems in the world - welcome to the world of Augmented Reality for motorists.

And the proof… Compare these two vehicle tracking events and KPI reports. The top map illustration shows a Ford Transit van (without the system) with persistent speeding and revving KPI’s, whilst the second shows a perfect score with the speed and rev’ limiting on. Adaptive Speed Control Adaptive speed control "is now a mature technology which is capable of delivering substantial reductions in excessive speed and thereby considerable benefits in terms of safety."

Depending on how the technology is implemented, over the 60 year period from 2010 to 2070, it would be expected to reduce fatal accidents by between 10% (approximately 15,400 fatal accidents) and 26% (approximately 43,300 fatal accidents), serious injury accidents between 6% (96,000 accidents and 21% (330,000 accidents), and slight injury accidents by between 3% (336,000 accidents and 12% (1.3 million accidents).

Ways in which car manufacturers could make it easier for their customers to stay within speed limits are discussed in RoSPA's Policy Paper, "Helping Drivers Not To Speed".12