Ever-cognizant of consumers' distaste with the concept of tracking, insurance companies have often tread lightly when it comes to the amount and kind of data they ask for in telematics or usage-based insurance programs. But the customer base is evolving quickly, and now there is more chatter in the industry about unleashing the full power of sensors and analytics to get more granular data on insured drivers.
Towers Watson's latest UBI survey found consumers' privacy concerns about UBI have decreased by 7% from last year's edition, to 35%. Towers Watson telematics director Robin Harbage said in his opening keynote at the Insurance Telematics USA 2014 show in Chicago that this means that insurers can start moving away from "event counting" things like hard braking events as rating factors and move on to more robust data.
"It's not the harsh braking event you care about -- it's what occurred directly before that that you really care about," he says. "One of the biggest UBI mistakes insurers make is not taking advantage of increased data granularity for rating factors. Real-time is the future."
The Hartford's assistant director of product development, Stephen Fernandes, agrees. He says that many UBI programs to this date have tended to use "small data" that's only captured four to 10 times a day -- things like the aforementioned hard braking or cornering events. While that allows insurers to lower their sensor costs, they can get much more actionable data by installing sensors with more capabilities.
"My recommendation would be to collect all the data all the time and store it in a database, because eventually you will want to measure it and it will allow you test up different hypotheses," Fernandes says. "You might get noisy data, but it might be worth it to collect all the information, then you can change the calibration level."
Insurers can also start adding to this data contextual information like traffic patterns and weather to get a full picture of how a policyholder drives regularly or what happened in a certain situation. All that will cost money in terms of IT infrastructure, but there are ways to defray those costs, he adds.
"The cloud is definitely the future" for data storage, Fernandes says. "And it allows you to acquire that analytical muscle."
Progressive is currently exploring cloud options for its rapidly expanding telematics data assets, says UBI GM Dave Pratt. However, the company also recently completed the installation of Hadoop-powered server clusters.
"We've been collecting data at one-second intervals all along with Snapshot, and now we're doing research on adding more data elements -- for example, might append to that what kind of roads you drove on," Pratt says. Hadoop allows
Nathan Golia is senior editor of Insurance & Technology. He joined the publication in 2010 as associate editor and covers all aspects of the nexus between insurance and information technology, including mobility, distribution, core systems, customer interaction, and risk ... View Full Bio