Measuring and Pricing Phone Distraction Risk A telematics-based analysis of U.S. driver behavior and its impact on the insurance industry PART 1 1 INTRODUCTION The COVID-19 pandemic caused unprecedented disruption to driving habits around the world; within five weeks of the World Health Organization declaring a pandemic, driving was down more than 60 percent in the United States. In this report, you will find four That disruption has thrown old risk pricing models distinct looks at distracted driving into disarray; telematics data shows that as from different points of view: driving went down, speeding on the roads spiked. Now, nearly 14 months later, driving is returning • An analysis of how the COVID-19 to pre-pandemic norms, as is speeding. pandemic affected driving in the U.S., However, phone distraction has remained and what can be learned about phone stubbornly high throughout the first three months distraction from telematics data. of 2021. More research is needed to uncover exactly • An examination of the role of why phone distraction isn’t in lock-step with total regulation and enforcement in driving and speeding, but telematics data shows curbing phone distraction while the United States still significantly struggles with driving that looks at how state laws putting the phone away while behind the wheel. are shifting to confront the crisis. Cambridge Mobile Telematics is the global leader in • A whitepaper reviewing how CMT’s smartphone telematics. We measure more drivers actuarial research reveals that phone around the globe, and refine our technology daily distraction is a causative risk factor to provide the most accurate data on road safety. that predicts future claims. Smartphone telematics is the best way to measure the risk associated with phone distraction; during the • A look at the next generation of pandemic, our partners had a near real-time look at telematics, DriveScape, which uses how the pandemic affected their books of business. AI-based computer vision to identify and contextualize distraction factors We continue to study phone distraction closely, inside and outside of the vehicle. because not only is it predictive as a risk factor – it’s causative, with the most distracted drivers showing a loss frequency 2.2 times higher than the least Together with our partners, distracted drivers – but because it’s a behavior that we’ll strive to use this multi- drivers can actually control and improve. We take faceted approach to improve the responsibility of identifying, understanding, and our understanding of distracted improving phone distraction very seriously, and there are driving, find better ways to several groups inside CMT dedicated to this research. measure it, and ultimately make smarter drivers and safer roads. 2 AUTHORS Ian Murphy Director of Marketing Lakshmi Shalini & Communications VP of Risk & Insurance Analytics Cambridge Mobile Telematics Cambridge Mobile Telematics Ian began his career as a newspaper journalist, Lakshmi has over 17 years of experience in analytic covering politics, business, technology and sports, product development in auto and home insurance when his editors would let him. After years covering using best in class statistical analysis and machine beats about business and technology, he transitioned learning algorithms. At CMT, Lakshmi leads the strategic to marketing by using his experience as a reporter to development of telematics scores and advanced risk create digestible narratives for complex technological factors adopted by insurers globally to accurately ideas – translating “Engineer to English.” He began price drivers and build innovative coaching programs working with CMT in 2019 as a content strategist, and to mitigate risky behavior and make roads safer. now leads the marketing and communications group. Ryan McMahon VP of Insurance & Mike Benjamin Government Affairs VP of Internet of Things Cambridge Mobile Telematics Cambridge Mobile Telematics Ryan’s background has taken him to the heart of road Mike Benjamin, VP of IoT, joined CMT in 2019, and safety issues, including at the scene of crashes as manages the development and production of the an Emergency Medical Technician to helping people hardware and software associated with CMT’s recover as a claims adjuster in the insurance industry. market leading IoT devices. Prior to joining CMT, Before CMT, Ryan’s career spanned multiple positions Mike worked in the air travel information business within the industry including helping to introduce the first as CTO of OAG and CEO at FlightView. As CEO at telematics-based system in the U.S. that rewarded drivers OpenRatings, Mike led a team applying AI to predict for safe behaviors. At CMT, Ryan’s work is focused on supply chain risk for manufacturers. Mike earned his advocating for road safety issues and helping partners BS and MS in Mechanical Engineering from MIT. around the globe to deliver on CMT’s promise of making the world’s roads safer by making drivers better. 3 Phone Distraction Stubbornly Persists as 1 Pandemic Traffic Returns To Normal By Ian B. Murphy, Director of Marketing & Communications, CMT The COVID-19 pandemic has caused an unprecedented interruption to travel. As local and national governments grappled with slowing the spread of the virus, lockdown orders changed vehicle traffic patterns. Businesses encouraged employees to work from home, altering the morning and evening commutes – all indications show those decades-old driving patterns will be permanently disrupted. This never-before-seen phenomenon has rendered a more traditional year- over-year examination of distracted driving patterns pointless. But in looking at data for the last five quarters – all of 2020, and the first three months of 2021 – there is a specific trend that is both worrisome and worth following: gains in reducing phone distraction behind the wheel seem to have been interrupted during the pandemic, and bad behaviors adopted while there were fewer cars on the road are persisting as traffic returns to more familiar levels. Driving Fell more than 60 Percent from Pre-Pandemic Peak To measure just how significant the disruption in driving was, CMT examined the number of trips taken and the total distance driven per day by a cohort of 5,000 drivers from across the United States. Each driver in the study had at least one trip in each month from January 2020 through March 2021. While some national and regional governments had started to react in early March, the World Health Organization declared a global pandemic on Wednesday, March 11, 2020. CMT measured the daily trips and distance compared to that of the peak driving day in the first 70 days of 2020 before the pandemic; that day happened to be Friday, January 31. To normalize the standard fluctuations of weekday vs. weekend driving, all daily numbers in this study reflect seven-day averages. PART 1 4 Total Driving Returning WHO declares pandemic 1 to Normal in Q1 2021 Source: CMT Research 0.75 Trips taken in the US 7-day average 0.5 Fraction from the peak Distance driven in the US 0.25 7-day average Fraction from the peak (Jan 31st) the peak day from Fraction 0 April May June July March March August October February February January 20 September November December January 21 On March 11, 2020, the day the pandemic was declared, the data showed there was already a 19.5 percent decrease in distance driven, and 18.3 percent decrease in trips from the peak day. Two weeks later, on March 25, both distance and total trips had halved – total daily distance had dropped 51.3 percent from peak, and daily trips had decreased by 50.3 percent. The nadir of daily driving was the week of April 15: at that point distance per day had fallen 61.7 percent, and total trips per day had dropped by 59.5 percent. There was a moderate recovery over the next two months – by June 17, distance driven and daily trips were below peak by 37.3 percent and 38.5 percent, respectively. Daily totals remained essentially flat through the end of summer – by September, daily distance was at 41 percent below peak, and daily trips was at 43.4 percent. From that point driving again declined; during Q4 of 2020 there was a major spike in COVID-19 cases in the United States. According to the Washington Post, the 7-day average for reported cases on September 30 was 43,216; on October 30, it was 79, 894; By November 30, it was 161,599. Daily cases peaked on January 13, 2021 with 248,209. During that stretch of time, the trough for daily distance and daily trips differed – the low point for distance was November 18, with 49.2 percent below the pre- pandemic peak, while trips reached their low two weeks later, on December 2, with a 53.8 percent decrease. Since those lows – and accepting normal seasonal interruptions for winter holidays – there has been a steady increase in driving, including a significant acceleration in March 2021. On March 3, daily distance was at 32.4 percent below peak and trips were at 34.6 percent. By March 31, daily distance and trips had risen to just 19.6 percent and 25.2 percent below peak – very similar to daily driving on the day the pandemic was declared. PART 1 5 Empty Roads Led to a Spike in Speeding It is important to note the changes in total driving over the last five quarters because it provides context to the significant spike in risky driving behavior, especially speeding and phone distraction. The increase in speeding was particularly drastic. This analysis used the same cohort as above, over the same time period, January 2020 through March 2021. What’s measured here is the total risk associated with speeding, as per CMT’s actuarial research based on billions of miles of telematics data.