Tax season is right around the corner! Taxes = money; money = credit scores; credit scores + big data now = how driving habits can predict the types of premiums insurance companies can charge for coverage. FICO, the data analytics company focused on credit scoring services, has expanded its commercial interests to rating drivers through telematics technology – rating a driver’s acceleration, braking, cornering, speeding, cellphone distractions and other behavioral data that can be captured and turned into a FICO driving score via a smartphone app.
FICO isn’t the only game in town in utilizing telematics technology to target the automobile insurance industry. INSURETHEBOX is the UK’s leading telematics car insurer, having collected over a billion miles of telematics data since their launch in 2010. insurethebox pioneered the use of telematics-based car insurance and shaken up the established car insurance market.
Telematics is an interdisciplinary field that encompasses telecommunications, vehicular technologies, road transportation, road safety, electrical engineering (sensors, instrumentation, wireless communications, etc.), and computer science (multimedia, Internet, etc.). Telematics can monitor a vehicle by combining a GPS system with on-board diagnostics, making it possible to record – and map – exactly where a car is and how fast it is traveling, and cross reference that with how a car is behaving internally. Add communication over a 3G network and telematics can be used to send both data and communications back and forth between a vehicle and a central management system. Using sensors in cars and a trackside wireless network, Formula One teams have been using telematics for years to see exactly where opponents are on the racetrack.
Both FICO driving scores and insurethebox are designed to give people a way to improve their driving skills through feedback, based on the premise that safe driving leads to rewards and lower premiums. What will be most damaging to the score you might ask? In the same way that your credit score gets dinged by bad financial behavior such as late bill payments and high debt, your driving score will get dinged by bad driving habits that could lead to a crash. Unlike traditional credit histories that can be ordered, the FICO driving scores are still not downloadable.
The things that will ding your score the hardest will be your cellphone use while driving (including whether you touch your phone, text, Snapchat, or even use Bluetooth.) Speeding, hard-braking, whether you take hairpin turns, and have a heavy foot on the gas pedal will also be hard on your score. The program will also provide a “gamification or shamification” rating, showing how you compare to other drivers in your company, family or neighborhood.
Although companies have expressed interest in using the score, consumers are not enthused about letting an insurance company put a device in their car to monitor their driving habits in exchange for discounts. This was made apparent in a 2016 survey conducted by the Pew Research Center. In addition to auto insurance companies applying these scores to calculating premiums, life insurance companies could follow suit, as could car rental agencies in applying the scores to their rates; commercial drivers might be rated for employment risks based on the scores.
Credit scores plus big data influencing driving behaviors – now that’s an interesting thought to share with budding entrepreneurs!