A few months ago, Root added mobile-phone use to its risk metrics, alongside speeding and hard-braking. It found roughly 80 percent of the people taking its “test drive” were texting or talking at the wheel, according to co-founder and CEO Alex Timm.
“We were very cautious and thought we’d just measure it and provide some feedback to customers,” Timm said. “But we found it’s incredibly correlated with accidents.”
Root quickly tuned its risk model to make distracted driving a bigger factor and, as it monitors its customers, it recently started sending surcharges to drivers who used their phones and discounts to those who didn’t. Timm, who rose through the ranks at Nationwide before starting Root, said a slowness to adapt among larger competitors is tied to a fear of losing customers. After all, those who see high rates for a distraction violation can still find an insurer that won’t penalize them nearly as much—at least for now.
“It’s hard for them when they find a new variable like this,” Timm explained. “And no one in the market is actually forcing them to change.”
This article was provided by Bloomberg News.