New Insurer Patents Optimize Commute Routes and Sniff out Road Rage

As the world awaits the fifth generation of cellular technology, U.S. insurers are investing in telematics to track their policyholders while offering customers new services that also control losses and collect data for underwriters.

The Hartford Fire Insurance Co. on March 12 received a patent for a system that essentially acts as a back seat driver. The invention selects the safest route for the daily commute and tells drivers to slow down or speed up according to the timing of upcoming traffic signals.

Also in March, State Farm Mutual Automobile Insurance Co. was granted a patent for a system that uses image sensors to notify a motorist that he is unfit to drive because of intoxication or drowsiness. The system can be hooked up to a breathalyzer, according to the patent document.

Allstate on March 21 applied for “road frustration index risk mapping and mitigation system” that will uses biometric sensors that would monitor eye movements and heart rate to determine a driver’s level of frustration and suggest alternate routes, while also alerting the carrier to potential loss cost implications.

Each of the systems depends on the digital transmission of data, something that is expected to happen three to ten times faster as cellular communications adopt 5G. By increasing the speed of transmissions, 5G also will enable a far great volume of data to be transmitted.

Jean-Francois Gasc, a managing director for Accenture Insurance, said insurer investment in telematics is spurred by dramatic cost reductions. Devices that once cost $100 now cost $2, he said.

Further advances are inevitable now that carriers are able to piggyback their telematics onto their customer’s smartphones, he said. He said advances in cellular technology will allow insurtech applications to evolve rapidly from the Snapshot product pioneered by Progressive Insurance, which uses a device installed in the car to collect data over a fixed period.

Accenture’s research suggests that consumers are willing to trade personal information for tangible benefits.

Accenture surveyed 47,000 consumers in 28 markets around the world and found that 59% of consumers would share location and lifestyle data for benefits including more-rapid loan approvals, discounts on gym memberships and personalized offers based on location. The survey found that 53% of consumers would share location and lifestyle data in exchange for personalized services and information to reduce the risk of injury or loss.

“We are moving toward something where the only value given the customer isn’t in terms of price, it’s really added services that are meaningful and provide value,” Gasc said.

Hence, The Hartford presents its “driving route optimization” system, which will suggest a motorist’s commute routes based on the traffic conditions, weather and road conditions. Along the way, the system can send messages to “guide the driver to optimal driving behavior,” according to the patent. The system can even tell drivers to accelerate or decelerate to arrive at each traffic signal while the light is green.

The patent application says the system can be used as a standard, non-optional part of its online application and underwriting process and may replace conventional risk assessments that are based on the policyholder’s home zip code. But it can also be used in conjunction with a telematics-based rating discount program, according to the patent.

Another invention by The Hartford would enable insurers to keep track of who is driving its policyholders’ car. The carrier on March 21 applied for a patent for telematics system that will create “driver signatures” by tracking braking patterns, route selection, the devices that connected and even what radio stations are played and at what volume. That can be used to help underwriters more accurately gauge risk and alert customers to high-risk behaviors, according to the patent.

The Hartford’s investment in telematics isn’t confined to automobile insurance. The carrier on March 14 applied to patent a system that would augment loss control efforts by workers’ compensation insurers. The system would continuously transmit data about the movement of machinery and machines to detect hazardous conditions, such as unsafe heavy lifting oroverheating machinery.

Donald Light, a director in the property and casualty unit for Celent, said technology is changing the relationship between policyholders and insurance companies. Consumers are already familiar with trading privacy for discounts. Now the can trade privacy for additional services, such as The Hartford’s route optimizer and Allstate’s frustrated driver detector.

“This technology has the potential to create win-wins for both the insurer and the insured, the policyholder,” he said. “This will make your life better, and by the way may change your behavior in some ways. That’s new and different for insurance companies.”

What’s also new is the amount of information that insurance carriers can collect through telematics. Light said it makes sense that established carriers, who have long been in the accident prevention space, are now innovating with telematic systems to achieve loss control through data collection.

As more data systems are deployed, insurance carriers that have detailed information about their policyholders will have a competitive advantage over carriers that don’t, Light said. That leaves established carriers such as Allstate, State Farm and The Hartford the option of buying licenses form insurtech startups or building the technology themselves.

While market forces drives insurers to expand data collection, they run up against a societal expectation of privacy.

“They have to be very forthcoming as far as disclosures,” Light said. “Why do you want this information? It very well may make a lot of people uncomfortable.”