Insurance carriers continue to be vocal about the need to better understand the effect of advance driver assistance systems (ADAS) on insurance loss cost. However, inconsistency and a lack of definition in how the auto industry classifies these features is getting in the way of carriers making this connection. You need a way to cut through the classification noise so you can develop better ratings based on the type of features on any given vehicle and how those features might contribute to safer driving.
When we talk about vehicle information, we’re talking about three things:
- Vehicle build data, which you could call the birth certificate of the vehicle
- Vehicle history data, which is everything that’s happened to the vehicle since it rolled off the assembly line
- Connected car data, which indicates what’s happening with the vehicle in real time
Vehicle build data can be derived from the 17-position vehicle identification number (VIN), which most if not all carriers use in rating calculations. The problem is that the presence of ADAS equipment is not inherent in the VIN. This information gap can interfere with your ability to accurately predict risk.
We estimate that over half of the insurance industry has ADAS in mind but is not yet using it in rating. We also estimate that another 20% or so of carriers are only providing a less advanced token discount for ADAS. Our mission is to enhance the VIN decode so you can incorporate ADAS information into your underwriting process, the same way you’ve been incorporating traditional vehicle attributes.
What do automakers really mean when they name an ADAS feature?
A lack of standardization is a roadblock to understanding ADAS features and how they could impact risk. There are dozens of auto manufacturers, and dozens more brands, that describe what amount to the same features in different ways. Often this is done to distinguish the brand and fit in with their existing brand language and terminology.
The challenge this presents for carriers is that you can’t be sure what each manufacturer means by any given ADAS label. For example, there are approximately 60 ways of naming collision avoidance. To further complicate the problem, even the same brands will name the same feature something different from model year to model year and/or create a “package” with their own naming that contains multiple features.
We’re taking the mystery out of ADAS classification
To address this problem, we’ve created a classification system that takes the mystery out of ADAS naming so you can make better use of this information in rating. Our effort is two-pronged. We’ve normalized based on nomenclature and categorized based on what the feature does. Our classification system extends beyond the traditional ADAS behavior model of Active, Warning and Assist to create a more descriptive model that categorizes a feature according to purpose or intent of the feature design. If you are working for an insurance company, you can request a copy of our classification guide here.
Matrixing the two constructs of behavior and purpose to a more granular level offers a much clearer picture of the ADAS world, which can give you a better picture of risk when you’re underwriting or running modeling exercises. Our solution also provides information about a feature’s availability, which can provide some additional insight into driver behavior. For example, is a vehicle not equipped with a feature because it wasn’t available in that model or because the consumer chose not to purchase that feature as an option?
At LexisNexis Risk Solutions, we can provide ADAS vehicle build data down to the VIN level so that when there’s a VIN sitting in your interface for a quote, you know exactly how that specific vehicle is equipped. Our classification system currently covers 58 ADAS features, which we think captures everything in the market today plus quite a few things automakers plan to release in the coming model years. There is also a higher level feature grouping that can be used for initial analysis and clustering before getting into the details of each of the 58 features.
Welcome to the new frontier for insurance rating
We believe better understanding ADAS-equipped vehicles is the next frontier for insurance rating. We’re doing everything we can to make sure you’re prepared for that adventure. In my next blog post, I’ll explain how you can improve your business by taking advantage of the growing ADAS trend.