Apps that let you book a ride to work or borrow a car for your next vacation are feeding into a revolution in auto insurance -- while also raising some privacy red flags.
Data on everything from how frequently a car is booked, the type of vehicle rented, the destination, the amount of time between making a reservation and the trip, how hard the driver slams on the brakes to how punctual and friendly a person is on the drive could all be fair game for the industry.
Startups like Turo Inc. and BlaBlaCar believe they can take this information and use it to find new ways to assess risk and create new businesses tied to auto insurance.
“It’s not so much about an individual’s story there, but at an aggregate level across millions of trips, patterns exist that actually predict risk,” Turo’s U.K. head Xavier Collins said in an interview.
The famously staid and risk averse auto insurance industry is slowly finding ways to use new types of data analysis to help it make decisions about who to cover, how much to charge and which customers are most likely to leave for a competitor, said Ingo Blöink, a consultant in Germany who was previously the European director of Daimler Insurance Services.
Sleeping Beauty
A mix of telematics that measure a car’s performance and other publicly available records together with privately garnered “soft data” can be fed into a program to discern patterns. That can create a “microsegment” risk analysis that more finely slices who’s most likely to get into an accident or commit fraud, which could eventually replace most actuaries, Blöink said.
“The industry is a sleeping beauty slowly waking up; they’ve not realized that there’s huge potential,” he said. “It will completely change the way risk will be underwritten in the next 10 years.”
San Francisco-based Turo and France’s BlaBlaCar already have specialized arrangements with insurers -- Allianz SE, Liberty Mutual and Axa SA -- that offer tailored products to cover drivers who’ve borrowed another person’s car or used the service to transport someone else in their own car.
The companies are part of a ride-sharing industry, led by the likes of Uber Technologies Inc. and Lyft Inc., that’s challenging traditional car ownership and rentals. Turo’s platform lets users lend personal cars to others. BlaBlaCar arranges carpools between cities.
Privacy Questions
At an aggregate level, this type of data is “definitely something that’s of interest to us and we are exploring,” said Martin Hoff, Allianz Automotive’s head of product management and innovation, noting, however, that it isn’t being used currently. A record of good driving from such companies could help new drivers applying for auto insurance, he said.