Insurers loop in technology, police to drive people towards safety

Besides family, if there is somebody who wants you to drive safely, it's your insurer.

India’s insurance space is buzzing with experiments where insurance firms are using police and technology to nudge their customers towards safe driving behaviour. Bajaj Allianz General Insurance is looking to offer discounts to safe drivers following a police verification, Insurance Regulatory Development Authority of India and Delhi Police are looking to implement a project broadly on similar lines. Logistics service providers who take extra care are engaging with insurers to develop such cheaper policies.

DRIVE SAFE, PAY LOW

Bajaj Allianz recently (early January 2020) tied up with Pune Police to reward drivers for safe driving behaviour. Basically, the insurance major will provide a discount on the motor insurance premium if customers declare that they have followed traffic rules and regulations. “We will further verify the information from the traffic police on an as and when needed basis and accordingly provide the benefit to the customer,” Bajaj Allianz MD and CEO Tapan Singhel stated.

Some three years ago, Bajaj Allianz also experimented with an onboard tracking device (called DriveSmart). Customers who installed DriveSmart in their vehicles received real-time driving pattern information along with other features from the insurer aimed at assisting them improve their driving behaviour. To Bajaj Allianz, DriveSmart is helping as a pre-cursor to the ‘pay as you consume’ product that it rolls out under the ‘regulatory sandbox’ approach, an IRDA move to test new policies through pilot projects.

Recently, Bajaj Allianz, along with other general insurance companies like Bharti Axa, TATA AIG, Go Digit, ICICI Lombard, Acko and Liberty got a nod from India’s insurance regulator (IRDA) to offer pay-as-you-use policies for a few months.

Simply put, pay-as-you consumes policies will make people pay a premium based on the extent to which a vehicle is used (say, the number of days or number of kilometres). However, whether these policies will also link premium to how the customer drives during that time is unclear.

To link level of premium cost with the type of driving, India’s insurance regulator – IRDA – made a working group, which has recommended that drivers who violate traffic rules should end up paying penalty premium (higher premium) for unsafe driving. “We have submitted the report to Delhi (Police). We hope to see such a system in place over the next few months,” said TL Alamelu, Member (Non-Life), IRDAI, speaking at an insurance and road safety conference recently.

Implementing such driver-based insurance policies would require a shift in India’s general insurance market -- from the traditional model of linking vehicle insurance to vehicles and owners to linking an insurance policy with drivers.

CREATING PRODUCTS

Logistics service providers who take extra steps to track safe drivers share a mixed experience on getting cheaper premium charges. RailYatri, a bus aggregator, jointly developed a policy with ICICI Lombard, while BlackBuck, a truck aggregator, is looking to develop such a policy.

RailYatri, which has a fleet of over 80 buses that ply between cities, found multiple insurance companies were keen when it wanted to extend a personal accident insurance and hospitalisation product for all its bus users. From the insurers that it interacted with, RailYatri chose ICICI-Lombard as it had settled higher claims-ratio (the insurer settled more claims than others), Swapnil Tripathi, RailYatri, told BusinessLine .

RailYatri, which had AI-driven driver fatigue alert system, a round the clock call-centre and speed governors, said that it did get a cheaper premium. RailYatri customer don’t pay extra for such insurance product unlike other bus aggregators, airlines, etc.

“Our risk profile was much better because of the safety measures we take. We did get a good premium. Also, we created a product today which somebody might launch in a few years from now,” RailYatri’s Tripathi said, adding that even small processes like ensuring right name and age of passengers on tickets increase the chance of a passenger getting the claim.

BlackBuck, a truck aggregator which has lakhs of trucks using its app, is trying to make insurance companies provide incentives for safer drivers on its platform. BlackBuck alerts its drivers about their driving behaviour but is yet to get any benefits from insurance service providers for the same.

Explaining how they implement safe driving, Rajesh Yabaji, co-founder and CEO, BlackBuck, told BusinessLine, “For example, if one driver is braking or accelerating harshly many times within an hour on a specific route, while other drivers on the same route are not doing the same, then we alert both the driver and owner of the truck.”

Asked whether there are any insurance benefits as a result of making drivers aware of their driving habit, Yabaji said, “Not yet. There are no such insurance products in the market...That’s the (idea).”

CHALLENGES & OPPORTUNITIES

As companies mull rolling out such products, insurance sector officials say that they have to address “data privacy” concerns, and have the consent of users. The permission of the customer to share data is a must for participation in such products, a committee on insurance technologies chaired by IRDA Chief General Manager Yegnapriya Bharath has noted.

New models are likely to emerge in the sector as several car manufacturers are already capturing many data on the vehicle usage through on-board devices.

But, even in such cases, whether insurers can dip into this data and if yes, to what extent, raises privacy concerns. Can the car makers share personal data or only macro data?

“Are people aware of the purpose for which the data is being used,” asked an official from India’s insurance sector.

Governments’ IT arm, NIC, has data regarding vehicles (vahan) and drivers (sarathi) through the country. But, as a policy, it does not share “traffic violation” data with any agency, said an official. Traffic violation data can be accessed by traffic police and enforcement officials who use the eChallan app (operational in 20 states). If someone has committed a traffic offence in Delhi, and commits another crime in another city, then police of the other city can see that history, based on vehicle or license number.

GLOBAL EXAMPLES

Globally, insurance companies in several developed countries use technology to frame policies that incentivise safe drivers through lower premiums. The safety parameters are tracked by devices in vehicles. Allstate, a US-based insurance company, introduced Drivewise, which tracked the extent of vehicle usage; and drivers’ behavioural pattern like speeding and hard-braking reportedly resulted in a 12 per cent drop in claims, says a paper by Vellore Institute of Technology’s Subramanian Arumugam and R Bhargavi. TD Insurance (Canada) also tracks speed parameter to alert the driver and charges premium accordingly. Progressive (US) also implemented a Snapshot, which monitors driving behaviour even provides incentives to drivers who sign up.

State Farm (insurance and financial services company in the United States) has a UBI Program called “Drive Safe and Save”, which records data including hard acceleration, hard braking, speeding and time of the day. The paper titled, “A survey on driving behaviour analysis in usage-based insurance using big data”, has noted how several insurance companies globally are already using technology to grade drivers based on parameters like speed, acceleration, braking and cornering, to lower insurance charges.

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