Advice & Best Practice

The role insurance can play in road safety

According to the Royal Society for the Prevention of Accidents (RoSPA), Great Britain now has one of the best road safety records in the world. However, about five people die on British roads every day, so there is still much more to be done. RoSPA latest reports show there has been little progress towards reducing the number of accidents on this island’s roads—a reduction of just 2 percent (1,752 in 2019 compared to 1,784 in 2018) in the number of fatalities, similar to the level last seen in 2012 after a period of substantial reduction from 2006 to 2010. 

While insurance is not a direct contributor to road safety, it is certainly an enabler. How so? Well-designed and implemented insurance that rewards safer driving allows next generation product development and provides protection against the cost, with improved road safety as its side effect. Accidents come at a huge human and economic cost by the time you figure in hospital treatment, repairs, personal loss, etc., so even when road safety is the side effect of insurance it is something to be welcomed.

There are many stakeholders responsible for improving road safety, such as national and local governments, civil society and the private sector all working together to accelerate progress. Insurance plays an important, if somewhat hidden, part of road safety, as it covers the costs of road crashes to society and the economy.  The financial cost accrues fully to the insurer and mitigating the exposure is a priority. One of the big levers insurers have is to design programs that reward safe drivers with lower premiums. While accidents will never be eliminated, effective behaviour-based insurance programs have been shown to reduce unnecessary accidents by up to 30%. This is a win-win-win for insurers, drivers and vulnerable road users such as cyclists and pedestrians. The financial incentive to reduce risky driving behaviour has a beneficial side effect in that it also reduces the human cost of road accidents. This could be seen as the hidden hand of insurance.

Improvements in road safety are an obvious benefit to the public as well as the insurance industry. Insurance coverage that rewards safer driving makes sure that health and property costs for road crash victims are protected, but it also benefits insurance companies by expanding their market and reducing the number of claims. 

Then there is the motivation factor—a driver who wants to achieve a safe record is much more likely to avoid accidents than a driver who doesn’t care about safety. Insurance can have an enormous impact on improving road safety, particularly insurance that is powered by data-driven machine learning.

Rideshur, the Human-ai insurance product for fleet vehicles, makes the most of data and rewards lower-risk behaviour with lower premiums and therefore incentivises sensible habits. 

How do such techniques and advancements lead to road safety? If you can use technology to gather more than driver data, you are able to create a more comprehensive picture. Data points such as weather feeds, traffic patterns and density, roadworks, human movement and social feeds can all build that picture so that it is possible to programme contextual risk.

Using machine learning, programmes can complete a contextual risk analysis. At the same time, the programme can calculate driver risk based on established criteria such as fatigue as well as a range of driving behaviours.

These data points combine to empower accurate rating and pricing and allow for the deployment and swapping of live models in real time. Motorists learn which driving behaviours carry the biggest risks and this can be used as a lever for them to adjust their driving accordingly, making them less likely to have an accident. The preliminary data suggests a reduction of 65 percent in accident frequency when such analysis is used, which is a huge step towards keeping drivers and other road users safer.

In addition, data-driven insurance allows us to innovate. Autonomous vehicles are the future. Data-driven insurance, and machine learning are working together to generate the data essential to the self-driving vehicles of the future, providing the perspective necessary to deliver risk-free insurance, whether there is a person driving or a piece of software behind the wheel.

The insurance industry can help prepare for the future now—not just in terms of the provision of more support for electric vehicles or the adoption of autonomous ones, but in the products they prepare for fleet management and the insurance premiums that go along with it.

Mark Musson is the founder and CEO of Human-ai. He is on a mission to make data-driven vehicle insurance the norm. Building a future where insurance is fairer for drivers and fleet owners, and with a better understanding of risk for industry providers, is using cutting-edge technology to solve age-old problems.

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