In September, Zendrive CEO & co-founder Jonathan Matus was invited by the insurance experts at A.M. Best to discuss the rise of predictive analytics, the distracted driving epidemic and how new technologies are reshaping the insurance industry.
The largest driver analytics platform in the world with over 150-billion miles of driver data analyzed, Zendrive has become a data goldmine for insurers who are looking to outperform others’ ability to segment risk and stay a few steps ahead of the competition.
John Weber of AM Best: “Is there a lack of awareness when it comes to predictive analytics on the part of the insurance industry?”
“To some degree,” answered Matus. “One phrase that I think is a good description of the situation is that the future is not equally distributed.”
Matus explained that some insurers are leading the pack with predictive analytics, but most are using old models that follow “tried-and-tested” (but antiquated) actuary science.
“What we’re trying to do is bring some of the techniques that the tech world has developed for a variety of other needs into the insurance world, and help make the most out of the data available.”
Leading actuary Milliman, an independent party, showed that Zendrive’s driver data analysis is up to 6x more predictive of future crashes than the industry standard. With this predictive power, Zendrive is able to help insurance companies more accurately measure risk and create new offerings.
Prior to Zendrive, Matus spent six years at Facebook and Google where he focused on various mobile and speech recognition projects. At Google he was one of the early members of the Android team, helping drive its growth towards becoming the best-selling mobile platform.
John Weber of AM Best: “How big of a problem is distracted driving these days and how should the insurance industry be addressing that?”
“Unfortunately, both traditional insurers and even those that are leading the pack are not aware of how big of a problem it is.”
The National Highway Traffic Safety Administration (NHTSA) estimated that 660,000 of drivers out on the road use their phones during daylight hours. In a recent study, Zendrive found that the actual number was 100 times worse: at least 69-million drivers use their phones while driving each day.
“If a third of all crashes and if 90 percent of trips have some connection to distracted phone use, not using it for pricing underwriting for actuary practices is quite risky,” explained Matus. Zendrive’s technology anonymously detects driver phone use. Aggregated, this data is more important than ever in helping insurers accurately measure and rate risk.
Usage-Based Insurance (UBI)
John Weber of AM Best: “Do you think UBI can change driver behavior or improve it?”
“Yes, absolutely,” Jonathan replied. Given it’s been around for about 25 years, UBI isn’t anything new to insurers. What’s changed dramatically over the past few years is the technology behind it. Traditionally, UBI has been hardware-based and embedded into cars or sold as aftermarket products through a variety of funky names: OBDs (onboard diagnostic dongles), “black boxes,” dongles and others.
“Insurers are shifting away from hardware-based technologies because ROI is very difficult to track with hardware based telematics,” shared Matus.
What Zendrive does differently is it utilizes the super computers that accompany every driver – smartphones. The sensors in smartphones not only collect driver behavior data more accurately but also unlock a number of valuable new data sources for insurers.
“Smartphones not only help us better understand distracted driving but also monitor and coach drivers. This is what Zendrive’s business is all about.”
John Weber: “Do you think more insurers will be embracing UBI insurance programs?”
“One of the things that insurance companies are acutely aware of is adverse selection. If you are not picking up the best risk in the market someone else is.”