Historically, auto insurers use various socio-demographic underwriting factors to differentiate driver risks. With the invention of GPS devices, information such as mileage, traffic condition and driving habits can be incorporated into auto insurance premium calculation. Several major auto insurance companies have offered usage based insurance (UBI) programs where auto insurance premiums are sensitive to actual GPS readings combined with driver’s driving behavior. However, given that telematics data are proprietary to the insurance companies that collect such data, the accessibility of UBI is extremely limited.In this research we showcase how second-by-second GPS data can be integrated into existing or new auto insurance pricing structures. We use two types of data: real-time GPS trajectory data collected using a traffic app, as well as survey data. We incorporate vehicle trajectories and accident data to quantify the relationship between driving hazard and accidents with the goal of establishing the linkage between driving risks and accident costs. GPS data considered in this study include not only tradition UBI factors, but also the unique contextual-based risk measurements that compares the driving speed of the vehicle with other drivers on the same road segment. Although smartphone data is used in this study, the methodology developed can be applied to GPS trajectory data collected from other devices such as on-board diagnostics (OBD) or black box solutions. We find that hard brakes, hard starts, peak time travel, speeding as well as driving at a speed significantly different from traffic flow are highly correlated with accident rate. We illustrate the potential underwriting loss an insurer may incur resulting from adverse selection if omitting pertinent risk factors. The results of our study can help insurance companies that are interested in getting into the UBI area set up their auto insurance premium rates.
Transportation Research Part A: Policy and Practice – Elsevier
Published: Jul 1, 2018
It’s your single place to instantly
discover and read the research
that matters to you.
Enjoy affordable access to
over 18 million articles from more than
15,000 peer-reviewed journals.
All for just $49/month
Query the DeepDyve database, plus search all of PubMed and Google Scholar seamlessly
Save any article or search result from DeepDyve, PubMed, and Google Scholar... all in one place.
Get unlimited, online access to over 18 million full-text articles from more than 15,000 scientific journals.
Read from thousands of the leading scholarly journals from SpringerNature, Elsevier, Wiley-Blackwell, Oxford University Press and more.
All the latest content is available, no embargo periods.
“Hi guys, I cannot tell you how much I love this resource. Incredible. I really believe you've hit the nail on the head with this site in regards to solving the research-purchase issue.”Daniel C.
“Whoa! It’s like Spotify but for academic articles.”@Phil_Robichaud
“I must say, @deepdyve is a fabulous solution to the independent researcher's problem of #access to #information.”@deepthiw
“My last article couldn't be possible without the platform @deepdyve that makes journal papers cheaper.”@JoseServera