AI Case Study

Allstate is offering pay-as-you-drive plans based on measurement and analysis of customer real-time driving behaviour resulting in up to 30% reduction in premiums

Allstate insurance offers pay-as-you-drive plans in 30 US stages that reflect miles driven along with customer driving behaviour such as braking style, time of day and speed. Using sensors in the car along with advanced analytics drivers can lower premiums by up to 30%. Allstate better aligns premiums and risk with customers.

Industry

Financial Services

Insurance

Project Overview

Allstate offers "pay-as-you-go telematics-based discounts track mileage but also use their devices to monitor how carefully you drive. Hard braking is a big factor, and so is the time of day that you drive – late nights or heavy rush-hours could ding you. A few companies look at outright speed, but only ding you if you go faster than 80."

"Participating customers receive a discount on their next bill once they establish a baseline for their driving behavior over 30 days. They can also go online to track their performance, which tends to increase their loyalty. Likewise, insurers can avoid putting effort into retaining riskier customers, and they can increase these customer’s rates to reflect what they learn about their overall risk pool."

"At renewal time, you get a discount off standard rates based on the company’s scoring system.

“Drivers who pose the least risk save the most,” says Michelle Megna, Insurance.com managing editor. “Pay-per-mile and pay-as-you-go programs are a way for insurance companies to seek out lower-risk drivers.”

Reported Results

"Allstate has been expanding the product and it is now available in 30 states. The plug-in stats are used to decide if you get a 10 percent discount for the first policy term. Allstate says good drivers who rack up few miles during following terms may qualify for up to a 30 percent cut."

Technology

Machine learning modelling of insurance risk based on mileage, how hard you brake, time of day and speed.

Function

Marketing

Customer Management

Background

"Insurers such as Allstate are beginning to offer pay-as-you-drive plans that incorporate a deluge of real-time customer-driving behavior gathered through devices installed in cars. Sensors measure how fast an individual customer drives, how much he or she drives, and how safely he or she navigates the roads. Signals of someone who is a higher risk can include hard braking, accelerating, and turning, as well as the number of miles driven at night or in rush-hour traffic."

Benefits

Data

"...pay-as-you-go telematics-based discounts track mileage but also use their devices to monitor how carefully you drive. Hard braking is a big factor, and so is the time of day that you drive – late nights or heavy rush-hours could ding you. A few companies look at outright speed, but only ding you if you go faster than 80."