Risk Segmentation using Telematics Data

Chief Actuary - Andy Goldby - April 24th, 2023

Progressive, one of the most important motor insurers in U.S.A made history in their last earnings call.  They dedicated the whole event to the evolution of their telematics propositions that they launched in 1996, explaining how it is now the key driver of their best-in-class performance. Starting to record journey data with a device based solution, they moved to a smartphone app in 2016 which they now fully rely on to score their clients showing that the ‘telematics factor’ was by far the most powerful single factor in their pricing algorithm.

While they were very explicit on their pricing strategy stating that their clients with the best scores have a discounted premium which is 3 times cheaper than the price offered to those with the worst scores, they didn’t divulge any details of the mathematics behind the scoring formulas since their secret sauce is internally developed and jealously guarded Intellectual Property.  However, it is not just Progressive that is seeing these benefits.

At The Floow we have been helping a variety of carriers for over a decade to refine raw mobility data into a granular and predictive understanding of risk.

Some of our clients apply our driving scores to the data collected from their own boxes whilst other clients have embraced the power of smartphones as a mobility sensor and benefit from additional scores like distraction.



For each journey, we provide to the driver (and the insurance company) 6 individual scores and an overall score summarizing the individual’s driving risk:

  • Smooth Driving : A measure of the driver’s anticipation including acceleration and braking.
  • Distraction : A measure of mobile phone use that can take the driver’s eyes and mind off the road.
  • Speed : A measure of the safety of the speed the car is travelling at.
  • Time of Day : A measure which considers the time of day or night and the day of the journey. Driving during the night is around 10 times riskier than driving during the daytime.
  • Fatigue : A measure of the length of a journey. After a continuous journey of 2 hours, driver fatigue can set in.
  • Road Risk: A measure of underlying risk of the roads that the customer travels on.
  • Overall : An overall measure of risk based on an aggregation of the 6 scores.

It is no secret that measuring the distraction produced by the smartphone is the most predictive of claim frequency but is also the score which helps the more people improve their safety while driving.

These scores have been derived from our decade of experience with drivers across the globe and are highly predictive of claims experience out of the box.  However, the formula of those scores can be modified by our clients to satisfy their needs and experience. Our in-house actuaries and data scientists collaborate with actuaries, data scientists and underwriters who share their claims data with us to ensure our scores uniquely predict insurance risk. Once claims data is shared and the scores are optimised against that data, the results are the distinct Intellectual Property of that client and interestingly we find that the results are different for each client we work with.

Our clients derive multiple benefits from the scores which allow them to engage frequently with customers, help customer reduce their risk and save on their policy and last but not least get an economical return of those actions.

Despite the current tough motor insurance operating conditions, our clients have reported loss ratios of up to 15% better for their telematics books vs their traditional portfolio (illustrated in the figure below), even after allowing for the telematics discounts with the better drivers being worthy of receiving up to a 60% discount.

With this level of risk differentiation and overall performance improvement, The Floow could be your ideal partner, whether you want to leverage the power of your customer’s smartphone alone or combine it with data from a tag or even their connected car.

If you would like more information on our scores or how best to use them to drive additional value please contact






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