Prediction of ultimate loss ratio of single risk will revolutionise motor pricing
•Drivers 11 x more likely to have an accident on 40 mph road than 70 mph road
•Fault claims most frequent between 3am and 5.59am on a Saturday morning
www.wunelli.com
Wunelli are Marking their fifth year in business and the main source of driving information for insurance companies has revealed some interesting data. Through the detailed analysis of 764m miles of data is has collated, Wunelli has established that all insurers can in fact determine ultimate loss ratios of each individual risk within weeks of the inception of a policy.
In a new White Paper ‘Thinking Outside the Box’, Paul Stacy, R&D Director and David Neave, Non-Executive Director, confirm the most predictive driving parameters* and from these parameters, reveal how driving scores will enable insurers to price on a sample of one. Wunelli believes the use of driving scores will provide a long-term antidote to the pricing challenges of the industry rather than a shorter term pricing quick win.
Paul Stacy, Research and Development Director for Wunelli says: “Most insurers are currently under and over pricing premiums because they are not taking driving scores into account when pricing. We have been collecting data for 5 years and accumulated enough knowledge to say with certainty how the future can look for insurers if they use driving scores to personalise pricing. Directly measuring driving behaviours dramatically improves pricing accuracy when combined with traditional rating factors.”
The predictive power of the driving data is evidenced in new analysis revealed by Wunelli showing the most likely time for fault accidents to occur and the fault claim rates for road types. Surprisingly the analysis reveals accidents are almost 12 times more likely to happen on a road with a 40mph speed limit than a 70mph speed limit (figure 3) and Friday night/Saturday mornings have the highest incidents of at fault claims, rather than Saturday night/Sunday morning. It also reveals how Wednesday night/Thursday morning is seeing a higher claims frequency.
Paul Stacy concludes: “We have reached a point now where we know that an accurate score can be produced within weeks of policy inception using a hard wired device and just 200 miles through a telematics app. If insurers grasp the opportunity it will create the greatest revolution in insurance pricing and account management we have ever seen.
*The most predictive driving parameters:
- Verified mileage and garaging
- Time of day – night time driving
- Day of week
- Type of road
- Speeding – amount of incidents exceeding road speed limits
- Smoothness – rate of hard braking and cornering events
- Familiarity – driving on known roads
- Excessively high levels of short journeys
- Congestion – actual speed relative to road speed limit
- Pace – speed relative to other drivers at that point on the road
- Confidence – absence of firm acceleration on joining slip roads and junctions
http://www.wunelli.com/whitepaper/issue1.pdf
