Auto insurers are always looking for new ways to better assess driving risk and offer more personalized rates to their insureds. This is where telematics data is a game-changer for insurance scoring. The data is highly predictive of risk because it’s based on driving behavior insights and thus, can greatly enrich existing auto insurance rating programs to help improve lift, segmentation and customized pricing. In short, leveraging driving behavior insights in a telematics-based scoring model can help you better rate policies from the start, improve the customer experience as early as point of quote and increase profitability.
A telematics-based scoring model is a useful tool for more accurate ratings and premium pricing based on driving behavior. Leveraging telematics data in your rating program helps better protect you from unnecessary risk while giving your customers the more personalized experience they want. But not all scoring models are created equally. As my colleague, Lisa Greenberg, Lead Data Scientist for the U.S. Connected Car team here at LexisNexis Risk Solutions, states in her recent eBook on the topic, “A robust and sophisticated telematics scoring model that efficiently and effectively draws from the right data sources gives you the crucial information you need, when you need it.”
In the eBook, Lisa outlines four critical factors to look for in a telematics-based scoring model to maximize the performance of your existing auto insurance rating plan:
- Does the model leverage robust and credible telematics data?
The telematics data must be credible with a large volume of driving behavior data which is accrued from billions of driving miles and hundreds of thousands of recorded claims to generate a strong performing model.
- Is the telematics scoring model designed to complement other rating factors?
Combining standard rating factors with telematics data can yield significant lift above standard rating factors in the predictability of driving risk.
- Are the telematics attributes—and overall score—reasonable and consistent?
Each attribute should make sense conceptually. If the model or any attribute performs substantially different between development and validation, it could indicate performance is a fluke or possibly exaggerated.
- Does the telematics model include coverage-specific performance insights and rating factors?
The telematics model performance data must translate into rating factors to fit your needs -whether that’s attracting or retaining premium shoppers or simply creating a more accurate rating plan relative to the expected losses.
Why you need a telematics scoring model that meets these criteria
A model with these capabilities provides you with a more informative picture of risk that aligns with your business’s risk appetite so you can:
- Price with precision
- Avoid adverse selection
- Attract and retain good risks
- Improve the customer experience
Our new telematics-based scoring model is now available for testing through LexisNexis® Telematics OnDemand, enabling you to deliver faster and more accurate risk assessment as early as point of quote. If you’re ready to take your auto insurance rating plan to the next level with telematics data and driving behavior insights, reach out to us at800.458.9197 or email mailto:email@example.com.
Want to learn more? Take a deeper dive into these four factors and learn more about the difference a telematics-inclusive scoring model can make for your business in our new eBook, Telematics-Based Scores Drive More Precise Ratings.