Arity, an Allstate-founded mobility data and analytics startup, has launched a telematics tool designed to help insurers more efficiently leverage driving behavior for better pricing.
The product – Arity IQ – is designed to boost insurer competitiveness by more widely enabling the use of telematics for pricing. By doing so, the goal is to modernize the customer experience.
Allstate launched the Chicago-based Arity in 2016, and the company has offices globally.
Typically for insurers, telematics-based pricing is delayed until after a consumer joins their telematics program and logs a certain number of trips. After data collection begins, the insurer learns the true driving risk and can then adjust the rate to reflect it at renewal, a process that can take up to 6 months. Arity argues that the timeframe makes insurers vulnerable to losing money if their initial price was inaccurate and consumers are upset with their renewal rates. Such a policy also dissuades consumers from joining telematics programs in the first place if they aren’t certain it will lead to a preferred insurance rate.
Arity IQ said that it addresses these issues by creating a better telematics experience for both insurers and consumers, specifically by calculating the most personalized, competitive price at the time of quote. With this feature, insurers can instantly explore Arity’s “tens of millions of connections” and incorporate the real driving risk of a specific consumer into their quote. This happens in real time, Arity added.
Arity claims that this feature will help insurers make more money by leveraging driving behavior data to more accurately price new business. Arity also asserts closed rates can be improved because carriers obtain information they need to price safer drivers more competitively but also do away with monitoring periods that can lead to price hikes and lost customers at renewal.
The Arity platform uses billions of miles of historical driving data from nearly 100 million active telematics connections and over a decade of data directly from cars.
Telematics is increasingly becoming integrated into auto insurance. As Bloomberg recently reported, experts such as Credit Suisse Group AG analyst Mike Zaremski see the coronavirus pandemic as having accelerated the adoption of pay-per-mile and telematics offerings among insurers, giving customers an option to save money for driving well, and less often.
Progressive earlier this year disclosed it had launched a “temporary change” to its Snapshot auto telematics program in light of the pandemic, letting non-Snapshot customers get a Snapshot-adjusted rate after just 30 days of monitoring, versus a normal monitoring period of six months. The offer, not available nationally, started in February and as of March went out to 5 million customers. About 9,000 went through and got the discount.
Newer telematics approaches vary. Recently, for example, the MGA Pouch debuted – an InsurTech that uses telematics to reward small businesses for safe driving. The company uses whatever telematics/app combinations its providers provide in order to provide a rate to a potential customer quickly.
Loop is an MGA startup that plans to sell auto insurance with premiums shaped by telematics-produced driving behaviors and AI-provided data on unsafe road conditions. Loop expects to go live this summer.