Driving Actuarial Innovation with Better Scores
Over the past seven years, The Floow has been focusing on how the data and insights derived from telematics can drive increased understanding of an insurer’s notion of risk for each insured individual.
It’s not just about tracking and scoring journeys but having a continual focus on honing those scores by training and improving them over time against claims data to create a competitive advantage.
It’s also about using those scores to identify new ways of engaging with insured drivers around their behaviour and encouraging them to make positive changes with safety in mind.
So how do we do all of this at The Floow?
We’ve identified four key areas of actuarial innovation which allow us to provide a great service to our clients and give them a competitive advantage in their market. These are:
- Better Scores
- Better Insights
- Better Partnerships
- Better Outcomes
Below we kick off our actuarial innovation series with a focus on Better Scores and the insights our scores can provide to our clients.
We have been honing our scores over several years to ensure they are highly predictive of claims, and we continue to do so as we learn more about driver behaviour and consider nuances which may improve their predictability further.
Our core set of behavioural and contextual FloowScores sit at the heart of all our products and are built upon billions of miles of journey data. These have been gathered from working with clients across five continents and taking data derived from any device to deliver a consistent experience.
We capture sensor data such as GPS location and speed from the user’s device and, if the smartphone is the primary device, we record how often it is used during the journey and combine it with contextual data which captures information relating to the roads that the driver is using.
This raw data is translated into KPIs for every journey relating to the drivers chance of having an accident. For example, we know that though distraction can be caused by many factors, perhaps the most significant is using a mobile phone. Our distraction score relates to time spent on a call as well as handling a phone whilst driving as our data shows there is a clear relationship between having a poor distraction score and a higher propensity to claim.
Similarly, in terms of contextual data, we have developed an understanding of the unique attributes of individual roads and the behaviours generally seen on them, analysing data in the context of other external factors such as how other people are driving, road layouts and pedestrian crossings.
Through various machine learning techniques, our data scientists analyse and score against six key components of our scoring algorithm, including speed, distraction, smoothness of driving, time of day, fatigue and the risk posed by the specific roads driven on.
By blending our behavioural scores with our contextual data, we’ve developed a scoring platform that is proven to challenge the traditional proxy-based model for assessing risk in an insurance policy. Our data gathered via client deployments over the past six years suggests that not only do telematics portfolios deliver an immediate 25% improvement in burn cost through a combination of self selection and the ‘big-brother effect’ but our scores deliver a predictive power creating up to 10x difference in the likely claims frequency between drivers achieving a low score (of <30) and those achieving a great score (of over 80).
Using this telematics scoring system alongside traditional rating factors (describing the customer, vehicle and policy) can add significant value to the combined model’s predictive power, adding 5-10x the additional impact that adding credit score did when that was introduced by insurers.
Our scoring mechanism, years of experience and wealth of data have created highly predictive scores which help our clients to truly understand the driving behaviours of their policyholders so they can price policies more accurately and fairly. However, all this is of marginal competitive advantage to our clients if they all use the same scores. To create the ‘killer solution’ you need to have something to give you an edge over your competition and we will discuss how to achieve this in the next instalment.
To find out more about our scoring and how it can provide benefit to your business and policyholders, get in touch or request a demo at firstname.lastname@example.org